Fidelity Investments Launching Bitcoin Custody in Q1 of 2019

Fidelity Investments – the world’s fifth largest asset managers with over $2.5 trillion in funds is launching a Bitcoin custodial product aimed at institutional investors in a bid to expand its digital asset service.

Billed for launch in March 2019, the custody asset comes just few months after Fidelity announced support for cryptocurrencies in 2018; while also allowing trading services for accredited firms though a platform for individual investors is yet to be announced.

Over the course of these past months, the Fidelity firm has continued to headline the crypto movement over all other Wall Street firms as the company looks to be the first Bitcoin custody service operated by a mainstream financial company with  its digital asset service rolled out to select institutions. The choice of ‘institutions’ by Fidelity is hinged on providing specialized services as Wall Street companies look for a trusted name to facilitate crypto trading and custody or wallet services; a move which Fidelity looks set to spearhead.

Fidelity Investments further recognizes cryptocurrencies as a potential contender for alternative investment vehicles in the future; while it acknowledges this, the firm opines that the currently used crypto wallets with their sophisticated features will not adequately serve institutional needs hence their interest to provide this service. The company remarks:

For institutions, the most pressing unanswered question is – how these assets will be secured f they choose to hold digital assets for their customers. The answer is full-service institutional custody solutions are needed – solutions as equally robust as those provided for traditional assets.

The above sums up Fidelity’s aim to attract and breed confidence in cryptocurrency assets for Wall Street firms, just as they emphasized that plans are in place for a roll out to other cryptos like Ethereum (ETH).

Also, Fidelity’s objective stems from a general opinion around the crypto sphere in which market participants and enthusiasts believe the that the next bull run and much needed development will be triggered by institutional interests (for trust and influx of money/investments) and activity in the space. This however is in contrast with basic cryptocurrency principles as they were created to decouple money from the centralization of institutions or traditional financial service providers.

Will Financial Centralization Be Replaced?

Over time, questions with regards to monetary/asset safekeeping options have been raised. With cases of market crisis, hacks and other lags by custody firms, the public have turned to banks and big-name financial firms to protect their investments.

Fast forward to this time, banks and other centralized financial institutions now form the core of the global financial world; with over trillions of dollars in customer assets being managed by a few hundred big wigs in a single phased system.

However, pitfalls like inflation, sanctions, poor interest rates, cost and other financial crisis have raised questions on the accountability and credibility of these banks and financial institutions hence, the need and movement towards distributed ledgers (DLT/Blockchain) and cryptocurrencies.

Despite the clamour for these cryptocurrencies and decentralized financial systems, a lack of clear cut traction and innovation has kept the big institutions on hold as they await trusted guidelines and entities for custody of their digital assets; if they should get involved.

Invariably, it seems unlikely that large institutions would trust crypto-start-ups with their financial assets; though pretty early to ascertain at this time, there are two predictable outcomes – a replacement of the traditional financial system or an in tandem system where both run uniformly.

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Written By

CryptoEnthusiast,CryptoEducator and Angel Investor,Writing Pro and Techie