Fidelity Investments has already set up a custody operation called Fidelity Digital Assets.
Fidelity International, a subsidiary of Fidelity Investments, is edging closer to entering the crypto space in what could be a major boost for bitcoin.
A report in the Financial News says someone familiar with the matter has confirmed that “staff across various parts of the international business” are investigating blockchain tech.
Also, according to the newspaper the parent company is close to getting its trading desk up and running.
Further evidence of rising crypto-friendliness at one of the world’s biggest fund managers comes from the fantasy crypto trading game it’s been running internally for staff at the international arm.
In-house crypto trading game
Starting off with £10,000 in virtual money, players are tasked with building a portfolio of crypto. Those who end up with the largest returns are eligible to win cash prizes.
Of Fidelity International’s 8,000 staff, 1,200 are already playing.
The existence of the trading game was revealed at an industry conference last month by chief executive Anne Richards.
“We have a bitcoin trading game that we use internally, as a way of teaching people about distributed ledger technology and digital tokenisation, which ultimately will be an important part of the whole financial system going forward,” said Richards.
If it is true that Facebook can be credited with fuelling the recent blast-off in the bitcoin price then the expected impact of moves in the space by Fidelity will be immense.
Fidelity Investments has $7 trillion in assets under management.
Institutions are already showing heightened interest in the crypto market, especially bitcoin, and are thought to be among the key buyers when the price was under siege during the “crypto winter. Fidelity Digital Assets will have helped institutions to on board into the sector.
Fidelity is an industry leader
A trading desk and news that the international arm is looking to either launch products or use distributed ledger technology for its back-office operations, will confirm its leadership role in the fund management industry.
There continue to substantial legacy costs at play in the fund industry, with paper trails still evident in settlement.
Holding back adoption of blockchain for many of the processes is the question of interoperability and the inertia borne out of the fear of disrupting systems that work in favour of the untried.
If Fidelity takes the plunge it could prove to be a pivotal moment for its industry.
In the same way that Facebook has likely sparked other Big Tech firms to speed up plans for applying the technology, Fidelity could do the same for its industry.
That will likely have an impact on both retail and institutions, bringing closer the possible launch of mutual funds, although the inability to get an exchange traded fund past US financial regulators may continue to blunt such efforts.
Speaking to the Financial news, Teana Baker-Taylor, executive director at crypto industry body Global Digital Finance, said of Fidelity International’s plans: “This signals to the market that traditional financial investment in digital assets is likely to increase and they intend to maintain their institutional first-mover advantage, providing access to digital assets to their mutual fund and pension clients, as well as private and institutional investors.”