Fidelity Investments announced on Tuesday the establishment of its Fidelity Digital Assets Ltd. to serve European clients investing in crypto assets. It 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.
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 via its Bitcoin Incubator.
Chris Tyrer, a managing director at Barclays who led the bank’s digital assets project, will join Fidelity Investments as head of Fidelity Digital Assets (FDA) in Europe to manage the new business and lead client service. Tyler said the demand they have seen for Fidelity’s digital asset custody and trade execution services has been borderless, and they are scaling their business to operate in a variety of jurisdictions to support this industry for the long-term. In doing so, they are building on the commitment to make digitally-native assets, such as bitcoin, more accessible to institutional investors.
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. These and other market indicators, alongside interest expressed from the UK and European client prospects, indicate a market with increasing potential which gives the group the confidence to expand the digital assets business geographically.
‘Significant Interest’ that Fidelity will have when expanding Crypto services in Europe
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, sale, and transfer bitcoin.”
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 that they will make sure that they are compliant with any U.K. or any other licenses that are required, but at this point, their understanding is that they do not require any additional licensing to do this in the U.K.
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.
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