Fidelity launches Ethereum custody and trading services

abdelaziz Fathi

Fidelity Digital Assets, the cryptocurrency unit of Boston-based Fidelity Investments, plans to launch Ethereum custody and trading services, citing high demand from institutional investors.

Fidelity is offering customers exposure to ether “using the same model provided for bitcoin investments today.” “With the Ethereum Merge completed, many investors are looking at Ethereum through a new lens,” Fidelity tweeted on Wednesday.

This move also provides a fresh regulated on-ramp for those looking to enter the crypto space, and comes shortly after the Ethereum network’s long-promised shift from an energy-intensive proof-of-work consensus mechanism to proof of stake. Ethereum’s environmentally-friendly Merge has drawn the attention of industry participants, Fidelity notes in the memo, with many paying closer attention to the blockchain’s growing potential.

The brokerage broadens its crypto offerings in the face of a recent slump in the market. Earlier this month, Fidelity launched an Ethereum Index fund, which has already raised $5 million since sales began on Sept. 26.

Fidelity’s cryptocurrency unit already features institutional-grade, crypto linked services, including custody offerings to safeguard holdings and execution services 24 hours a day, seven days a week.

Fidelity Digital Assets only serves institutional investors such as hedge funds, family offices and market intermediaries.

Initially launched in the US, Fidelity’s crypto arm made the decision to target Europe back in 2019, hiring Chris Tyrer from Barclays to lead operations. The unit is one of the first crypto custody and trading platforms to be launched by an incumbent financial services player.

The increased European listings came even as the US Securities and Exchange Commission denied Fidelity Investments’ application for a long-awaited spot bitcoin exchange-traded fund (ETF).

Fidelity Digital Assets, immersed in crypto since 2018, has doubled its staff in locations such as Dublin, Boston, and Salt Lake City. The move came as the firm was rumored to be considering offering crypto trading to its more than 34 million retail customers.

Fidelity has also been busy working on a crypto exchange, in partnership with Charles Schwab, Ken Griffin’s Citadel Securities and US electronic market maker Virtu Financial.

Fidelity, which has nearly $4.5 trillion in assets under management (AUM), has been trying to structure a product that looks as close as possible to a traditional ETF. Trading bitcoin through an ETP structure removes the technical challenges associated with cryptocurrency such as setting up a wallet or trading or unregulated exchanges.

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