President Tom Jessop of Fidelity Digital Asset Services recently was involved in an interview with Laura Shin of the podcast “Unconfirmed” on October 26th. During the interview, Jessop talked about the future plans for the company, along with the ways that they intent to improve the attraction of cryptocurrency to institutional investors.
Jessop runs the new investment arm at Fidelity, and he said that their plan for the cryptocurrency work is to move away from operating an exchange. He says that “other folks are already doing quite a good job at” running them. Instead, their focus will be on improving the quality of the market that customers take part in.
With the current exchange and infrastructure providers in place, Fidelity will work with them to modify the market in a way that “suits the needs of institutions,” rather than the retail clients. Right now, even though it seems that some exchanges have already been examined, Fidelity is quiet about the ones that they’ve already approved.
To meet the aforementioned needs, Fidelity is making their platform more like a traditional model, which will hopefully solve a major issue in the crypto world, in the eyes of Jessop. He believes that the necessity to have funds in-hand is a friction-causing issue. However, to eliminate the issue, Fidelity will have a setup that allows users to setup multiple trades at several exchanges before they settle, which Jessop believes is a requirement amongst institutional investors.
His interview continues as he speaks about the plethora of investors that have a major stance in the industry, but still have an issue with trading with a reliable custodian. That is where Fidelity comes in with a vaulted cold storage custody solution. The solution will be paired with security protocols that Fidelity already has in place, which will ultimately bring in a slew of institutional investors into the cryptocurrency world. As Jessop puts it, only Fidelity has the capability to make this happen, considering the need for physical security, cyber security, and operation security to protect customers’ private keys.
All of these types of security are available and practiced with Fidelity’s accounts. Right now, they provide support for over $7 trillion in assets, though the company has dabbled in both blockchain technology and cryptocurrency since 2014. Putting it simply, it seems that their tagline is, “We know how to manage security at scale.”
The industry has been garnering a lot of interest lately as it matures. Determining the role that digital assets can play has been one of the biggest hurdles, especially in appealing to broader institutional investments like family offices and new asset managers. However, as they begin to understand the equity markets, Jessop believes that there is an opportunity for progress.
Bitcoin’s whitepaper has been around for 10 years. However, the push for growth can be credited to increased interest and hopefully the new crypto offerings of Fidelity will create even more of a push. Going forward, Jessop claims that the industry should “expect more [influx] over this year and into ‘19, which will raise the bar for everyone and help accelerate growth in the market.”
He added, “Fidelity is excited to be the first, or one of the first, and expect there will be more [asset management firms] behind us.”