Leading financial services Fidelity Investments announced on Monday that it is moving into crypto-custody and trade execution through a subsidiary of the parent corporation. The firm is looking to woo institutional investors into crypto-trading through its latest start up-Fidelity Digital Assets LLC.
Three classes of crypto trading
The subsidiary, to be based in Boston, will be dedicated to three classes of crypto trading, namely: Institutional grade custody solutions, trade execution and a 24-hour dedicated client service for rendering trading advice.
The niche intended to be filled by this startup is in the category of sophisticated institutional investors including hedge funds, family offices and market intermediaries.
The startup will mark the completion of a journey undertaken by the firm in 2013 where it put up blockchain incubators. Since then, it has experimented with mining and integrated with Coinbase such that its customers can check crypto-balances via the firm’s website.
Fidelity is a big fish
The parent company is home to $7.2 Trillion in customer assets which ranks it as the fifth largest asset manager globally. Additionally, close to 13,000 firms and brokers rely on Fidelity Investments for all their clearing, custody and investment services.
All of the above notwithstanding, the firm’s activities in the cryptocurrency circles has been limited to a few periphery services and other donations’ nitty gritty. Through its intended subsidiary however, the firm will be looking to cash in on the crypto market, starting with Ether and Bitcoin.
While breaking the news, founder Tom Jessop said that the move had been informed by a recognition that there is a ballooning institutional demand for crypto assets as a class. He added that hedge funds, family offices and other sophisticated investors were beginning to seriously consider this prospect.
Devil is in the detail
The firm’s custody service will be geared towards providing a storage system that is secure, compliant and institution-class omnibus. It will include a vaulted cold storage.
Trade execution will allow for execution at multiple market venues utilizing the firm’s internal crossing engine and smart order router.
Lastly, the startup will dedicate resources to a 24-hour client service specialists to solve all troubleshooting.
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