Fidelity Assets is introducing bitcoin as a custody asset with a new product that enables consumers to commit Bitcoin as security for cash loans on its digital asset custody network.
Fidelity’s Foray into Bitcoin Custody
Loans are issued by third-party lenders and initially will contain only loans from BlockFi, a funding site for cryptocurrencies and a liquidity block provider for CME Bitcoin Futures. On the Fidelity network, BlockFi will give its institutional clients the option of custody of the Bitcoin pledged as security for their cash loans.
In a quote, Christine Sandler, head of sales and marketing for Fidelity Digital Assets, said,
We continue to see demand for increased capital efficiency from institutions that maintain long Bitcoin positions, and with this collateral agency capacity, our customers seeking that efficiency can access more opportunity with the capital that they trust us to keep safe.
From November 2019 to early March 2020, a Fidelity study of about 800 institutional investors in the U.S. and Europe undertaken by Greenwich Associates showed that 36% invested in digital assets and that U.S. investors who held digital assets raised their share from 22% in 2019 to 27%.
One of the first conventional finance companies to adopt the digital currency industry and blockchain is Fidelity Investments. In 2018, it introduced the Fidelity Digital Assets platform; its donor-advised fund, Fidelity Charity, recognizes contributions of Bitcoin and other digital currencies; and in August, it launched the Wise Root Bitcoin Index Fund I, a Bitcoin fund that is open to approved investors.
Bitcoin is currently in the midst of a rally, with some up and down turns. Bitcoin has had a fantastic year by all reports, including a fall at the start of the coronavirus pandemic that saw it lose 25% in March. Since December, it’s more than doubled and many fans are once again targeting the $20,000 mark as the next break barrier, with a few dips along the way
In recent months, innovations have helped drive this year’s rally. A Bitcoin fund was launched by Fidelity Investments, bringing its star strength and heritage to the Bitcoin space. Many famous names from Wall Street have bought in. Square Inc. and MicroStrategy Inc., public corporations, also recently invested in the coin.
And the October announcement of PayPal to enable consumers to tap cryptocurrency was one of the most prominent events for fans.
Fidelity’s Focus on Crypto
Fidelity is notably bullish on Bitcoin and cryptocurrencies.
In 2013, with the clandestine opening of its Blockchain Incubator, Fidelity’s experimentation with blockchain technology started.
Last year, following integration with crypto exchange and custody company Coinbase, Fidelity began allowing its customers to view their cryptocurrency accounts, although they were unable to directly transact using the Fidelity user interface at the time.
The incorporation contributed to rumors that Fidelity was developing its own crypto exchange.
It was no surprise when Fidelity collaborated with the MIT Digital Currency Project in May of this year to host the first Layer 2 Conference, which centered on the analysis and protocols being created to better solve blockchain assets’ scalability problems as they enter an ever-growing sector.