When one of the largest fiat asset managers in the world reveals that they have multiple cryptocurrency projects in different levels of development, it may be in everyone’s interest to pay close attention. Fidelity fits that bill – but they are currently dealing with a bit of a crypto crisis at the moment.
Fidelity launched a cryptocurrency-focused investment fund in 2017. The firm made use of extra funds, after a careful settlement of the balance sheet, to invest in the high-risk, high-return asset class.
However, a report on June 9, 2018, indicated the small fund is not currently operating after the concerned personnel left the firm. Furthermore, Fidelity’s work on its cryptocurrency exchange remains a subject of uncertainty, with no official documentation available yet.
Interestingly, the two former employees, ex-Vice President Matt Walsh and ex-analyst Nic Carter, went ahead and started their cryptocurrency fund, called Castle Island Ventures.
Fidelity’s developments in the cryptocurrency domain are undoubtedly significant. The firm is one of America’s biggest providers of 401(k) services and other retirement products.
The firm’s activities have been previously reported on and – in the now-paused fund’s case – indicated the extent to which they dived into the nascent digital currency market, presumably for the high-returns. If Fidelity brings its cryptocurrency exchange ideas to fruition, it would mark the start of a legitimized market, and attract hordes of retail investors sitting on the sidelines for lack for a recognized player.
Apart from Walsh and Carter, the investment house was not able to retain several other employees who directly worked on cryptocurrency projects. Ex-digital asset marketing lead for Fidelity Labs, Ben Pousty, left the firm in April 2018 to join Circle. Additionally, Kinjal Shah, a former consulting analyst with Fidelity, left to join Blockchain Capital, one of the earliest cryptocurrency funds.
Fidelity’ activities in the domain are in line with several other distinguished institutions making big moves in the burgeoning market. The parent organization of New York Stock Exchange (NYSE), Intercontinental Exchange (ICE), has been working on setting up a bitcoin exchange as per a report on May 7, 2018.
Furthermore, Goldman Sachs confirmed both a bitcoin trading desk for clients and the start of trading bitcoin futures on May 3. The move was announced on the back of Goldman hiring 38-year-old Justin Schmidt, a bitcoin enthusiast whose experience in trading cryptocurrencies on a personal level resonated with the bank’s bitcoin plans.
However, a large part of the industry remains cautious about investing in cryptocurrencies, primarily due to regulatory and security risks.
Still, when Fidelity becomes part of the crypto conversation the verdict is clearly in – crypto is here to stay.