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Fidelity Enters Crypto Market to Serve its Wall Street Customers

Fidelity investments

Fidelity’s Digital Assets subsidiary finds its First Custody Client in Michael Novogratz’s Galaxy Digital

Fidelity Investments, the 72 year old firm that takes prides in handling over 7.2 trillion worth customer assets, announced a new company venture ‘Fidelity Digital Asset Services’ earlier this week. Now, Billionaire investor Michael Novogratz’s crypto merchant bank, Galaxy Digital has confirmed becoming the firm’s “alpha crypto custody client”.

One of the biggest drawbacks to date for institutional investors when it comes to crypto trading has been the custody issue. Who is going to hold the asset? Where will it be held? Is the keeper secure enough in this day and age of cyber terror? Things might just take a huge turn as Fidelity Investments, the fifth largest asset manager in the world, is stepping into the cryptocurrency game through conducting custody of the cryptocurrency assets of its clients.

Addressing the issue of Custody

Fidelity Investments’ CEO Abigail Johnson, in a recent press release, revealed that the firm’s long-term mission in crypto sphere is to reform the infrastructure surrounding the asset class and enhance ease of accessibility.

“Our goal is to make digitally-native assets, such as bitcoin, more accessible to investors. 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,” she said.

Fidelity Digital Assets welcomed its first custody client, Galaxy Digital, within 24 hours of its launch. Galaxy Digital claims to share a similar vision as Fidelity with respect to institutionalization of the cryptocurrency market. There are other crypto companies like Coinbase, Gemini (run by the Winklevoss twins), BitGo, Ledger and ItBit who are working on similar solutions but Fidelity Investments is the first Wall Street firm to officially provide cryptocurrency solutions.

Novogratz had committed $302 million to Galaxy Digital, earlier this year, for the development of a full-service merchant banking business in the crypto-blockchain space. The plan was soon deployed leading the firm to be listed on Canada’s stock market within the following few months.

Where Purpose meets Power

About the upcoming partnership, Novogratz commented, “The resulting firm will have over 70 employees with deep institutional experience spanning across technology, investing, advisory, and trading. The Firm has also invested significantly in its management, operations, legal, and finance departments.”

With a partnership establishing between the two firms, the crypto market is expecting to see the Galaxy Digital clients’ investments coming in through Fidelity akin to the situation when Fidelity clients had purchased cryptocurrencies through Coinbase, another partner company, before Fidelity Digital Assets’ launch.

Fidelity Digital Assets’ founding head, Tom Jessep cleared that the subsidiary firm is a result of the company’s recognition of institutions’ demand for cryptocurrency.

“This is a recognition that there is institutional demand for these assets as a class. Family offices, hedge funds, other sophisticated investors, are starting to think seriously about this space.” he concluded.

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