Fidelity Investments announced on Tuesday the establishment of its new entity to serve European clients investing in crypto assets. Fidelity Digital Assets Ltd. will offer digital asset custody and trade execution services to investors such as hedge funds, family offices, and market intermediaries.
The custody service consists of a cold storage vault and “multi-level physical, operational and cyber controls”, the announcement details, adding that the trade execution service will provide clients access to multiple sources of liquidity.
Fidelity Investments is expanding its crypto services to European clients after seeing increasing potential in this market. The expansion builds upon the company’s U.S. crypto business. “We’ve seen significant interest and engagement by the institutional community, which show no signs of slowing”, the company revealed.
Entering European Crypto Market
Tom Jessop, head of Corporate Business Development for Fidelity Investments and president of the U.S. digital asset subsidiary, explained that the group is “encouraged by continued corporate and venture investment in market infrastructure companies as well as the entry of traditional exchanges into the digital assets ecosystem”, elaborating:
These and other market indicators, alongside interest expressed from U.K. and European client prospects, indicate a market with increasing potential which gives us the confidence to expand the digital assets business geographically.
According to Financial News publication, the new entity was incorporated in the U.K. on Dec. 16, but does not currently hold any regulatory permissions. Michael O’Reilly, COO of the U.S. digital asset subsidiary, clarified to the publication: “Obviously we’ll make sure that we’re compliant with any U.K. or any other licences that are required, but at this point our understanding is that we do not require any additional licensing to do this in the U.K.”
Building Upon U.S. Crypto Business
One of the world’s largest financial services providers, Fidelity Investments claims to have more than $7 trillion in client assets under administration and over 1.3 million trades processed each day, according to its website. The company began exploring cryptocurrency and blockchain technology in 2014. In 2018, it launched Fidelity Digital Assets, a subsidiary for providing crypto services to U.S.-based institutional investors. Jessop remarked:
Since launching Fidelity Digital Assets in the U.S. over a year ago, we’ve seen significant interest and engagement by the institutional community, which show no signs of slowing.
The U.S. digital asset subsidiary gained approval from the New York State Department of Financial Services (DFS) in November, allowing it to start operating as a limited liability trust company in the state of New York. The Bitlicense regulator detailed at the time that it had authorized the company “to provide a virtual currency custody and execution platform, on which institutional investors and individuals can securely store, purchase, sell, and transfer bitcoin.”
Moreover, O’Reilly told Financial News that London is the right base for Fidelity’s European arm for digital asset services despite the uncertainty of Brexit. “Both the fintech and crypto communities in London are strong and that’s evident from what we’ve seen from client demand or client requests”, he said. While Fidelity only supports bitcoin currently, it hopes to add other digital assets in 2020, the COO revealed, noting that the company will also monitor expansion opportunities in Asia.