Crypto Wars Are Coming As Fidelity To Rival Bakkt After Reportedly Turning Down Partnership For Own Exchange
Fidelity Reportedly Turned Down Bakkt Partnership to Develop Its Own In-House Crypto Exchange
Financial giant Fidelity Investments is developing its own in-house cryptocurrency exchange and custody solution, according to a new report. Fidelity turned down an investment in crypto startup Bakkt because the company is reportedly building a service to compete with Bakkt.
Bakkt is one of the most promising crypto stories of the year. Launched earlier this summer by NYSE parent company ICE, Bakkt seeks to create a crypto exchange and crypto custody solution for institutional and retail investors. The company is backed by Starbucks, Microsoft, and other corporate giants. Bakkt has also reportedly signed partnership deals with several major American financial institutions.
According to this new report, Fidelity is not one of those Bakkt partners. Instead, Fidelity rejected Bakkt because it was developing its own competing products.
That report comes from The ICO Journal, which cites “several sources in the know”, including sources “invested in Bakkt” and others who are “familiar with the equity offering”.
“It came to our attention that Fidelity passed on a significant stake in Bakkt for one reason and one reason alone – they plan to compete directly with Bakkt in the crypto space with its own custody warehousing and trading architecture.”
The ICO Journal’s sources claim that Fidelity already has several sizable working groups preparing crypto products and services. Fidelity plans to launch a crypto exchange platform in the near future along with a crypto custody service.
Like Bakkt, Fidelity plans to offer its crypto exchange and custody services to retail and institutional clients.
Fidelity Rejected an Investment Offer in Bakkt
Earlier this year, Fidelity reportedly rejected an opportunity to invest in Bakkt. The source reports that “things have run amok from there.” After Fidelity rejected the investment in Bakkt, the two companies became secretive about their development process.
Although Bakkt was announced earlier this summer, the platform had been quietly in development for the past two years.
Fidelity has been similarly quiet about their product:
“All we know is what we hear from a couple guys that work at Fidelity,” reports one source from The ICO Journal. “But even that is vague and a wink and a smile. But as we see stuff leaked via the media in some way it makes sense that they would scale up. Bakkt has all the institutional pipes, but Fidelity has that same access, but a massive retail name that can tap millions of customers.”
It’s no secret that Fidelity is developing its own crypto platform. Rumors of such a platform first appeared online earlier this summer. Fidelity is one of the world’s largest finance companies. They have significantly greater brand recognition than Bakkt. If Fidelity is really developing a crypto exchange and gateway like reports state, then it could be huge for the crypto space.
“Fidelity Is Said to Be Further Along”
If you believe the sources at The ICO Journal, then Fidelity is closer to launching a crypto platform than Bakkt. Here’s what one source had to say about the development of Fidelity’s crypto platform:
“Fidelity is said to be further along in the way they plan to leverage that same architecture [the architecture used by Bakkt]. If that is true, and that is a big if, it only furthers adoption, and the crypto ecosystem wins. Still, lots of chatter about what could come from a name like Fidelity.”
If Fidelity is genuinely ahead of Bakkt in terms of crypto platform development, then it seems unusual that Fidelity hasn’t announced anything to the public. Bakkt plans to launch their platform in November 2018 – just 5 or 6 weeks away.
There’s an overall lack of information about Fidelity’s crypto platform. Fidelity hasn’t even confirmed that the platform is in development. For all we know, Fidelity is not developing any type of crypto product and these are all just unfounded rumors.
However, if Fidelity is developing a crypto platform, it’s believed that it would take one of two different forms:
- A separate entity apart from existing Fidelity financial services and accounts
- An integrated exchange platform within existing Fidelity customer accounts
Existing Fidelity customers would be able to buy and sell crypto directly from their account screen, for example, if the second situation holds to be true. Regardless of what kind of crypto product Fidelity is developing however, a standalone exchange or integrated service, it would be huge news for the future of crypto as one of the world’s largest financial companies jumps on board.
Ultimately, as competition between Bakkt and Fidelity (allegedly) heats up, there’s one clear winner here: the crypto ecosystem.