Fidelity is making plans for its debut in Ether trading—and eventually in other cryptocurrencies.
The financial services company’s crypto arm, Fidelity Digital Assets, should have Ether available to its hedge fund, family office, and institutional clients by the end of March 2022, Tom Jessop, president of Fidelity Digital Assets, tells Fortune. Fidelity currently only offers Bitcoin, and it has yet to roll out any cryptocurrencies to the retail investor side of the business, or to announce plans to do so.
Jessop says Fidelity’s move to expand its crypto lineup is in response to demand from its more than 100 institutional clients—most of whom are either hedge funds or family offices. Bitcoin may be the currency that initially draws people into the ecosystem, Jessop says, but institutions are starting to set their gaze beyond it on other opportunities in the digital currency market.
To meet the demand, Fidelity is building out systems to support Ether trading, and eventually other currencies, too, although, he says, “we’re still trying to figure that out.” Jessop told Bloomberg earlier this week that the company was expanding its employee ranks by about 100—a 70% increase in size. The vast majority of those hires are engineers who will be building out support for new asset classes and extending operational hours for a crypto market that runs 24/7, he tells Fortune.
Fidelity itself is still forming its own opinions on other tokens and a central bank digital currency as well as on the innovation potential stemming from the decentralized finance—or DeFi—market, much of which is happening on Ethereum blockchain.
“I think it represents a new financial infrastructure that institutions and others can take advantage of,” Jessop says of DeFi. Regulatory uncertainty throws into question how they can bring those capabilities into the mainstream, however. “It’s something that we are developing a point of view and a thesis around,” he says.
Fidelity, which reported holding $9.8 trillion in assets across its various business lines in 2020, made its first jaunt into crypto in 2018, when it launched Fidelity Digital Assets and became one of the largest financial institutions to embrace Bitcoin. Fidelity Digital Assets is working on adding new order types, as well as additional liquidity providers to support volume and boost price competition. Right now, the company works with around seven market makers and one crypto exchange, Jessop says. He declined to specify who any of its partners were, nor the amount of Bitcoin assets its clients held at the company.
While most of its crypto clients are hedge funds or family offices, Fidelity is starting to see more and more companies that want in on the burgeoning market. Over the past few months, pension funds, endowments, corporations, and asset managers have started using its services as well, Jessop says—an indicator that crypto “is going more and more mainstream.”
