BI PRIME: Fidelity, a firm that oversees $2.4 trillion in assets, is building a digital asset exchange, an internal job ad reviewed by Business Insider reveals.and more »
Fidelity is plotting a big move into cryptocurrency trading - Business Insider
Fidelity's chairman and CEO, Abigail Johnson.
Thomson ReutersFidelity Investments, a firm that oversees $2.5 trillion in managed assets, is hiring to build a digital asset exchange, an internal job ad reviewed by Business Insider reveals.
The firm is also working on custody solutions for crypto, according to another job ad.
If Fidelity successfully launches these products, it would represent one of the biggest moves by a Wall Street firm into the market for digital assets.
Fidelity, one of the biggest providers of 401(k) services and other retirement products to Americans, is plotting the buildout of products that would push the market for bitcoin to the next level.
The wealth firm, which manages $2.5 trillion in assets, already allows certain clients to view their crypto holdings next to their other accounts in their Fidelity portfolio. And its CEO, Abigail Johnson, is a noted proponent of bitcoin.
But Business Insider has learned Fidelity is looking for talent to build its own digital asset exchange, according to a job posting sent out to employees at the firm.
Specifically, the firm is looking for a DevOps system engineer "to help engineer, create, and deploy a Digital Asset exchange to both a public and private cloud."
People with knowledge of Fidelity's crypto ambitions told Business Insider the firm had been working for about a year on an offering that would allow clients to buy and sell certain digital assets.
If Fidelity does launch a crypto exchange offering, it would arguably be among the biggest moves by a large Wall Street firm into the nascent crypto market, which stands at about $350 billion.
It would also pit Fidelity against numerous established crypto players, such as Coinbase, Kraken, and Bitfinex. It would also go head-to-head with the red-hot crypto offering by competitor brokerage Robinhood, which has lured over 1 million to sign-up for the service. To be sure, it's not exactly clear from the job ad whether the exchange would exist alongside Fidelity's other offerings on its site.
Such an offering could help legitimize the burgeoning crypto market, the market structure specialist Dave Weisberger said.
"Fidelity's reputation for achieving best execution for their retail clients should help legitimize the asset class," Weisberger said.
A Fidelity spokeswoman declined to comment on these specific crypto ambitions.
Other established Wall Street players are also weighing their own moves into crypto. Goldman Sachs has a team dedicated to building out a trading operation tied to crypto, and the New York Stock Exchange is reportedly building a crypto trading platform.
Yet other banks are remaining cautious. Regulatory and security risks are commonly cited as reasons bitcoin hasn't been adopted more broadly yet.
About a third of all crypto trading platforms have been hacked, according to a report by JPMorgan. The entrant of a player like Fidelity into the space could lure retail investors weary of trading on existing platforms.
Fidelity is also looking to hire workers to develop "first-in-class custodian services for Bitcoin and other digital currencies," according to another internal job ad.
The position falls under the firm's crypto division, the Fidelity Digital Asset Service unit. It is not clear whether Fidelity has cleared the regulatory hurdles to operate a qualified custodian product aimed at institutions, of which only a handful are operating in the crypto space.
On Wall Street, custody banks such as State Street and BNY Mellon safeguard large amounts of wealth for other institutions while abiding by strict regulatory requirements.
Some entities offer such solutions in crypto. But they are small firms and their names don't carry the same weight as a Fidelity. BitGo, another crypto tech provider, is working on a qualified custodian product. Paxos, a New York-based firm, holds a trust-company charter in New York.
The crypto exchange Coinbase has its own custody product, Coinbase Custody, which is aimed at institutional Wall Street firms and which went live earlier this year.
Weisberger said the move by Fidelity would make a lot of sense strategically.
"They have many of the components already: a significant retail footprint across the spectrum of active to less active traders, a prime brokerage area that knows how to account for custody of assets, they operate an ATS already (called 'CrossStream'), and have a reputation for excellence and risk control in their product offerings," he said.
This post has been updated to reflect the most up-to-date figure for Fidelity's managed assets.
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