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Fidelity Makes it Easier for Hedge Funds to Trade Cryptocurrencies

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Fidelity is launching Fidelity Digital Asset Services, taking a big step into cryptocurrency.  If done well, it may just help change the trust issue among institutions.

Part of the problem when it comes to cryptocurrency investing is how to prevent them from being hacked.   The other problem is that as of June 2018, $1.6 billion in cryptocurrencies were stolen from clients.

However, this new launch from Fidelity could change that for the better.

What Fidelity will Offer

In fact, the new company will offer custody and trade execution for digital assets.  All in an effort to target institutional investors like hedge funds and family offices.

“Our goal is to make digitally native assets, such as bitcoin, more accessible to investors,” Fidelity Investments Chairman and CEO Abigail Johnson said, as quoted by CNBC. “We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use.”

Fidelity Attempting to Fill the Gap to Advance the Industry

One of the steps in realizing this is to create a foundation of institutional-quality solutions that will continue to help advance the industry. While there are many retail service providers in the space today, there is a gap in support for institutions.

However, that could soon change with help from Fidelity.

Not only will the company offer client services, and trade execution for digital assets, it will provide a secure, compliant storage solution.  By doing so, it’ll help foster growth and potential further interest among institutions. Remember, institutions are the missing part of the cryptocurrency future at the moment.

Institutions can Help Cryptocurrency Markets Mature

For example, a stronger flow of institutional investors could help cryptocurrency markets “mature,” notes U.S. Commodity Futures Trading Commission chair J. Christopher Giancarlo.

“We’ve still got a long way to go, there’s a lot of issues in some of these spot exchanges, a lack of transparency, a lot of conflict of interest, a lack of systems and systems safeguards, and that’s a concern. But you know, like all things, it takes time to mature, and with the movement of more institutional investors into the space, I think we’ll see that [maturation].”

The cryptocurrency regulatory environment is full of gray areas.  A lack of legal clarity on this issue makes it impossible to manage for institutions.

 

 

 

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