Yahoo Finance Fidelity just announced a new business to let hedge funds trade cryptocurrencies
Fidelity, known for its mutual fund and discount brokerage businesses, is launching a new business called Fidelity Digital Assets to offer hedge funds and family offices custody and trading services for cryptocurrencies.
“Our goal is to provide an enterprise-grade custody and trading solution to institutions who are increasingly allocating to this asset class. We’re seeing a lot of demand in the market even though this space is still evolving quite rapidly,” Tom Jessop, a Goldman Sachs alum who heads of corporate business development at Fidelity, said at a crypto seminar in New York on Monday.
Jessop added that they’re going live in early 2019 and are in the process of on-boarding their first customers.
Former macro hedge fund manager Mike Novogratz, the CEO of Galaxy Digital, has argued that the “herd is coming” to the crypto space, but the biggest barrier to institutions has been custody. Novogratz called the Fidelity announcement a “big, big deal.”
Novogratz said that Fidelity won’t be the only player serving institutions, but they’re “getting out ahead of the pack.”
In the institutional world, some family-offices have already been allocating to crypto. That will be followed by more traditional funds, according to Jessop. He called some of the recent announcements of a few college endowments entering the space “quite a bit of news.”
As for the pension funds making moves, Novogratz expects that it may start to happen late in the first quarter and early in the second quarter of 2019 before they allocate.
“One of the real key things that need to happen is some of the consultants … to say, ‘Hey, this fund is OK. We’ve done the O.D.D., operations, due-diligence checklist,” Novogratz said, adding, “Most of those funds are looking for guidance on how to think about this asset class…I think the institutional world is going to galvanize on how to see this as an asset.”
Jessop said that Fidelity has done surveys with institutional investors and found that a “high percentage” is interested in the space. He added that they’re “very comfortable that there’s a business here.”
Fidelity Digital Assets will start with bitcoin (BTC-USD) and ether (ETH-USD).
—
Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter. Send tips to laroche@oath.com.
Novogratz: Cannabis stocks today are like cryptocurrencies in Dec. 2017
Langone: ‘For years, our political leaders have had their pants taken off by our trading partners’
Schwarzman: Nationalism and populism are the ‘biggest risks’ for the business community
Crypto investor Mike Novogratz says bitcoin is on the brink of a ‘Renaissance’
