Fidelity Digital Assets' Bitcoin Custody Services Go Live for 'Eligible Clients'

  • A few select hedge fund managers, family offices, and some other Fidelity clients may now access its bitcoin custody services.
  • The trillion dollar asset manager may consider adding support for ether and other cryptoassets.

Fidelity Investments., a Boston, Massachusetts-based multinational financial services corporation with over $7.2 trillion in assets under management (AUM), has announced that “a select group of [its] eligible clients” will now have access to its Bitcoin custody service, offered bt its digital asset arm Fidelity Digital Assets.

These few clients currently include qualified “hedge funds, family offices, pensions, endowments, [and] other institutional investors”, according to a recent update from Fidelity Digital Assets, the newly launched cryptocurrency-focused division of the Fidelity.

As mentioned in a blog post published by Fidelity Digital Assets, the asset manager has been focused on “building the technical and operational capabilities needed for securing, trading and supporting” cryptocurrencies with guidance provided by experienced institutional investors.

Fidelity’s blog also mentioned is has developed “a robust set of technical and operational standards at a level that institutions have come to expect” from the trillion dollar asset management firm. Notably, the financial services giant has been testing its crypto custody services for th past few months, and when they'll actually be launched is currently unclear.

Adapting Existing Operational Processes To Accommodate Cryptos

Notably, Fidelity’s new BTC custody service has been designed to help large institutional investors in securely storing and managing their cryptoassets. Commenting on its crypto-related initiative, Fidelity’s management remarked:

It’s been a challenging and rewarding time here, from critical decisions on product direction, to the intensive work of our development teams. Our operations, risk, and compliance teams are actively working with auditors to refine our policies and procedures, adapt existing operational processes, and to set new benchmarks for this aspect of cryptographic and blockchain-based finance.

Fidelity has also revealed that custodial solutions for bitcoin, the flagship cryptocurrency, may only be one of several other digital asset services the financial institution is planning to provide. Reports surfaced in late January 2019 that custody solutions for Ethereum’s native token, ether (ETH), may also be introduced by Fidelity in the foreseeable future.

Considering Adding Support For Other Cryptocurrencies

However, Tom Jessop, the president at Fidelity Digital Assets, revealed recently that adding support for other cryptoassets may not be a simple process. While speaking to CoinDesk, Jessop noted:

We’re currently supporting bitcoin, we have designs to support other coins over the balance of the year center to various criteria including our [in-house selection framework], where we obviously look … at client demand and other things.

Jessop added: “We’d love to have support [for] ether but you know you have a hard fork coming up and some upgrades, so I think we’re trying to see how those things work out before we make a decision to put them on the platform.”

As explained by Jessop, adding new cryptos to Fidelity’s proprietary custody services requires careful vetting of each cryptocurrency protocol. For instance, the recent  51% attacks against Ethereum Classic (ETC) called into question the safety of the Turing Complete proof-of-work (PoW)-based crypto network. Due to these types of risks, Fidelity Digital Asset’s management will carefully assess the risks involved with adding assets that may be vulnerable to serious security issues.