Fidelity Investments has set the opening of a custody service for cryptocurrency for March, under subsidiary Fidelity Digital Asset Services, LLC (FDAS).
A Bloomberg article cited employees of three firms, in contact with Fidelity in recent weeks, as saying that the custody service will initially be for BTC. Ether custody is expected by the sources to be offered next.
The company said this week, “We are currently serving a select set of eligible clients as we continue to build our initial solutions… Over the next several months, we will thoughtfully engage with and prioritize prospective clients based on needs, jurisdiction and other factors.”
The 70-year-old company, managers of $7.2 trillion in assets worldwide, first experimented with cryptocurrency mining in 2013, with its Blockchain Incubator, and providing support for Coinbase accounts on Fidelity.com. It launched Fidelity Charitable in 2015 for the collection of cryptocurrency donations, and reported $69 million received from this in 2017.
But it was only last June that its plans of offering cryptocurrency services, to institutional investors, were made known. CEO Abigail Johnson confirmed the planned venture in September, and FDAS was launched last October.
Besides digital asset custody, the company is planning to launch its own trading platform and provide client support for investors.
Fidelity will have to go up against both traditional financial heavyweights, including Goldman Sachs, and newcomers like Coinbase and BitGo, in the relatively new custody industry, which has been gaining prominence as a solution to hacked exchanges and other means of cryptocurrency theft, which remain common.
Blockchain forensics solutions firm Ciphertrace reported a total of $1.7 billion documented as stolen in 2018, about six times the thefts in the previous year. The ‘Cryptocurrency Anti-Money Laundering Report 2018 Q4’ showed $950 million of the thefts occurring in exchanges and other infrastructure. Other means employed by thieves were ICO exit scams, the putting up of fake exchanges, and SIM swaps, to name a few.
Listed among the ‘Top 10 Crypto Threats’ were Iran’s and Venezuela’s governments promoting their cryptocurrencies for the supposed purpose of “sanction evasion,” and transactions on BTC’s Lightning Network that “[e]nable anonymous bitcoin transactions by going ‘off-chain,’ and can now scale to $2,150,000.”
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