During a recent podcast, Fidelity Digital Assets CEO Tom Jessup provided some insight regarding the venture’s future plans in 2020. Currently, the institutional-focused firm only offers support for Bitcoin. During the next year however, Jessup intends to change that.
Fidelity Digital Assets and Ethereum Explained
Fidelity Digital Assets was established in early 2019. The venture was created by Fidelity Investments — one of the world’s largest financial services provider with 70+ years of experience, more than $7 trillion in client assets under management, and over 1.3 million trades processed each day.
As a provider of a growing number of services involving digital assets, Fidelity aims to bring about the reality “where all types of assets are issued natively on blockchains or represented in tokenized format”. They currently offer cold-storage custody services with an integrated trading service. Their primary focus is straightforward: institutional investors.
During a recent podcast, Fidelity Digital Assets CEO Tom Jessup said the firm could support Ethereum sometime throughout 2020 — so long as customers demand it. Currently, the firm only supports Bitcoin, the most popular digital asset with the largest market capitalization.
The reason they only support Bitcoin seems to stem entirely from the short history of digital assets. During the podcast, Jessup said a lacking timeline creates a significant hurdle when it comes to institutional adoption. Bitcoin clearly has the strongest history, and correspondingly has the highest demand from institutional capital.
Ethereum on the other hand, has a shorter history which is the primary reason it has no existing support from Fidelity. During the podcast, Jessup said,
“How do I know that if I buy this thing, it’s gonna be around tomorrow? Like what indication of durability or longevity do I have based on the fact that the history of this asset is 10 years old?”
Some say the lack of support for digital assets besides Bitcoin ultimately prevents Fidelity Digital Assets from becoming a major player in the digital asset space. If their support expands, they could become substantial competitors to popular custody firms such as Coinbase or BitGo.
A History of Fidelity Digital Assets
Though Fidelity Digital Assets was launched in early 2019, Fidelity Investments has had an interest in digital assets for quite some time. The global firm first expressed interest in digital assets back in 2014.
At the time, a single bitcoin sold for around $180. Fidelity initiated a bitcoin mining operation in the U.S. state of New Hampshire. They’ve also launched an app where, thanks to a partnership with Coinbase, users can monitor the status of their cryptocurrencies. Later, in 2015, Fidelity organized a charitable donation service which accepted Bitcoin, and offered notable tax savings to those who wish to donate their assets.
Last month, the firm was granted the designation of a New York Trust Company by the New York State Department of Financial Services. The regulatory status allows the firm to buy, store, sell, and transfer bitcoin on behalf of others.
As seen in the timeline above, the firm first accepted Bitcoin for donations, and less than two years later added support for Ethereum. According to Jessup, 2020 could be the year when Fidelity Digital Assets follows this same trend and offers institutional support for Ether.
What do you think about Fidelity Digital Asset’s CEO Tom Jessup’s comments? What do you envision as a consequence if the firm does indeed add support for Ethereum in 2020? We’d like to know what you think in the comments section below.
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firms specializing in sensing, protection and control solutions.