Fidelity Investments, a Boston-based asset management firm, which administers more than $7.2 trillion in client assets and has over 27 million customers announced it will be officially providing cryptocurrency solutions to its institutional investors.

Fidelity Digital Asset Services, a subsidiary of Fidelity is set to bridge the gap between the crypto sector and institutional investors by the beginning of 2019. According to its Chairman and CEO, Abigail Johnson, Fidelity’s goal “is to make digitally native assets, such as bitcoin, more accessible to investors”.

This financial services giant is a trusted name on Wall Street and seeks to use it’s 72 years of operating experience to move investors into the age of digital assets by providing crypto services which are secure and trusted, having been compiled and vetted according to a trusted Fidelity standard.

These services will include trading in cryptocurrencies across multiple exchanges using Fidelity’s existing smart order routing and internal crossing engine. Fidelity will reportedly also offer custodial services for crypto using public and private key cryptography, multilevel physical and cyber controls and offline, vaulted, cold storage to secure the cryptocurrency held in its custody.

Despite the high risk and volatile nature of the crypto market, Johnson confirmed that Fidelity will “continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use”.

The Potential of Institutional Investors

The importance of Fidelity’s announcement cannot be overstated as many believe that the move by the Wall Street powerhouse will prompt institutional investors to cross over into the crypto market. If institutional investors made the move to crypto it would have a substantial impact on the crypto sector, potentially doubling if not tripling the current market cap.

The importance of this development has not been lost on major players within the crypto space. Changpeng Zhao, the CEO of Binance, took to Twitter on 21 October 2018 to emphasize the impact a fund such as Fidelity could have on the crypto market.

He asked his followers what would happen if Fidelity allocated only 5% of their portfolio to crypto. The apparent answer is staggering as 5% of Fidelity’s funds is approximately $350 billion, which would certainly be enough not only to blow through the current crypto market cap but to change the market landscape.

According to Zhao, institutional money will enter the crypto market sooner or later, and it is just a matter of time before this happens.

#theherdiscoming

In a move designed to entice institutional investors who are willing to trade in cryptocurrency but are concerned about the safety of their investment, companies such as Northern Trust and exchanges including Coinbase, Gemini, Ledger and ItBit are reportedly working on custodial service offerings.

The latest partnership to emerge that supports the development of the crypto infrastructure and, more specifically, custodial services is that of Mike Novogratz, Goldman Sachs and BitGo.  

Novogratz, the billionaire ex-hedge fund manager who was a partner at Goldman Sachs, teamed up with the Wall Street colossus to contribute $15 million to BitGo, the cryptocurrency custodian and security company. BitGo has reportedly raised a total of $57.5 million in support of its latest custodial development project that seeks to provide institutional investors with a safe and reliable means of investing in crypto.

With developments aimed at enticing institutional investors into the market, many believe that next year will see a marked change in the crypto sector.

Do you believe these developments will convince institutional investors to take the risk on the crypto market? Give us your thoughts in the comments below.

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