Fidelity Exec: ‘Fairly Long Tail’ of Institutions Driving Mainstream Crypto Adoption

Fidelity’s considerable cryptocurrency endeavors are just getting started, an executive said, thanks in part to accelerating institutional investor interest in digital assets.

The bank has filed for a number of crypto-related ETFs in the US, but investors can expect more in the works.

About 90% of institutions interested in crypto expect to have skin in the game by 2026, according to a Fidelity study of institutional investors released last year. 

“It is potentially challenging for traditional investors to hold spot bitcoin in portfolios,” Christine Sandler, Fidelity Digital Assets’ head of sales and marketing, said during a webinar Wednesday with MicroStrategy President and CFO Phong Le.

“I would expect that…we will continue to innovate on the asset management side, because those exposure products are critical to the more mainstream adoption of digital assets in general.”

Fidelity Investments’ Canadian subsidiary launched an ETF in December that would invest directly in bitcoin.

Despite ongoing attempts since 2013, the Securities and Exchange Commission (SEC) has not yet approved a spot bitcoin ETF in the US — in the latest blow, the agency denied Fidelity’s Wise Origin Bitcoin Trust last week. 

“We reaffirm our belief in market readiness for a physical bitcoin exchange traded product and look forward to continued constructive dialogue with the SEC,” a spokesperson told Blockworks at the time.

In the hours following the SEC’s rejection of its proposed spot product, Fidelity filed for a pair of ETFs that would invest in companies involved in the metaverse and the broader crypto industry.

A Fidelity spokesperson declined to share any other specific product plans the firm may have.

Sandler said Fidelity has been studying distributed ledger technology for decades through its Fidelity Center for Applied Technologies, which launched in 1999.

The company began mining cryptocurrency in 2014 and has accumulated bitcoin since. Fidelity launched its crypto execution services and custody platform for institutions in 2017 and onboarded its first clients the following year. 

“While we’re a bitcoin-first company, we fundamentally believe that we’re building infrastructure to support the next several decades of innovation in financial services and beyond,” Sandler said. 

Fidelity has seen increased digital asset adoption from family offices, registered investment advisors (RIAs) and corporations. There is increasing interest from employees in slotting bitcoin into retirement funds, according to the company.

“While we’ve seen tremendous growth in terms of the institutional adoption, if you think you’ve missed it, you haven’t,” Sandler said. “There’s still a fairly long tail of folks that are just beginning to get started in this space.”

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