Ben Strack

<div id="highlights-block_61faf145b04f6" class="highlights">
 <ul>
 <li>Offering more products with crypto exposure is “critical” to mainstream adoption, according to Fidelity Digital Assets’ head of sales and marketing</li>
 <li>Fidelity began mining cryptocurrency in 2014 and launched its crypto execution services and custody platform for institutions in 2017</li>
 </ul>
 
</div>



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.&nbsp;



“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.



<blockquote class="wp-block-quote is-layout-flow wp-block-quote-is-layout-flow">“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.”</blockquote>



Fidelity Investments’ Canadian subsidiary <a href="https://cms.blockworks.co/fidelity-set-to-launch-spot-bitcoin-etf-in-canada/" target="_blank" rel="noreferrer noopener">launched an ETF</a> 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 <a href="https://www.sec.gov/rules/sro/cboebzx/2022/34-94080.pdf" target="_blank" rel="noreferrer noopener">denied</a> Fidelity’s Wise Origin Bitcoin Trust last week.&nbsp;



“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, <a href="https://cms.blockworks.co/fidelity-plots-crypto-etfs/" target="_blank" rel="noreferrer noopener">Fidelity filed</a> 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.&nbsp;



“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.&nbsp;



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

<div id="highlights-block_61af6d32cbb8f" class="highlights">
 <ul>
 <li>Alliance will create institutional platform to onboard traditional finance companies into the digital asset ecosystem, Nexo co-founder says</li>
 <li>Nexo’s client base can now use its credit and trading products with reliance on Fidelity Digital Assets’ custody and security solution</li>
 </ul>
 
</div>



Crypto firm <a href="https://nexo.io" target="_blank" rel="noreferrer noopener">Nexo</a> is partnering with Fidelity Digital Assets to boost institutional access to digital assets by offering custodial and lending services.



Nexo, a specialist of cryptocurrency-collateralized credit, and Fidelity Digital Assets as a custodian and collateral agent, will develop a product suite and compliant infrastructure for institutional investors seeking exposure to the asset class.



“On the one hand, what brought Nexo and Fidelity Digital Assets together was that we felt the pressing need to directly address institutional investors’ challenge of safely storing digital assets, which has historically limited the large players from entering the space,” Nexo Co-founder Kalin Metodiev told Blockworks. “On the other, we saw the once-in-a-lifetime opportunity to introduce services that simply do not exist to this day and this is precisely what we plan on doing through our collaboration.”



The partnership will offer an additional custody layer to Nexo’s security infrastructure. It allows institutional investors who currently custody their digital assets with Fidelity Digital Assets access to Nexo’s products and <a href="https://nexo.io/prime" target="_blank" rel="noreferrer noopener">crypto prime brokerage</a>. 



“We’ve seen tremendous growth of interest in digital assets from institutions within the European market and we’re committed to implementing sophisticated solutions to match those available with traditional asset classes,” Christopher Tyrer, head of Fidelity Digital Assets in Europe, said in a statement.&nbsp;



Nexo has processed more than $50 billion for 2.5 million users across more than 200 jurisdictions. Fidelity Investments, which had total discretionary assets of about $4.3 trillion as of the end of September, created Fidelity Digital Assets in 2018.&nbsp;&nbsp;



Another Fidelity Investments business — its Canadian subsidiary — was getting <a href="https://cms.blockworks.co/fidelity-set-to-launch-spot-bitcoin-etf-in-canada/" target="_blank" rel="noreferrer noopener">set to launch an ETF</a> that would invest directly in bitcoin. The Fidelity Advantage Bitcoin ETF (FBTC), which carries a management fee of 40 basis points, was to be listed on the Toronto Stock Exchange. 



Christine Sandler, head of sales and marketing at Fidelity Digital Assets, <a href="https://cms.blockworks.co/fidelity-digital-assets-sandler-the-regulatory-road-will-be-long/" target="_blank" rel="noreferrer noopener">said during Blockworks’ Digital Asset Summit</a> in September that the industry is in a period of mass expansion when it comes to digital asset adaptation, noting that regulation will follow.



The firm’s <a href="https://cms.blockworks.co/fidelity-most-institutional-investors-open-to-crypto-want-an-etf/" target="_blank" rel="noreferrer noopener">institutional investor study</a>, released that month, found that 84% of American and European institutional investors are interested in investment vehicles with exposure to digital assets.



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Nexo Partners with Fidelity Digital Assets

Casey Wagner

<div id="highlights-block_61562c8c7fe82" class="highlights">
 <ul>
 <li>Sandler thinks that regulators mostly understand blockchain technology, but the path forward will be long </li>
 <li>There has been a significant increase in institutional investors looking to get involved in the space, a trend Sandler expects to continue</li>
 </ul>
 
</div>



Earlier this month at Blockworks’ Digital Asset Summit in New York City, Fidelity Digital Assets’ Christine Sandler shared her thoughts on the current state of the regulatory landscape and what we can expect going forward.&nbsp;



Today’s regulatory environment is tumultuous, Sandler admitted, but the common notion that regulators lack understanding about blockchain technology is largely unfounded.&nbsp;



“Most regulators are really educated and really well informed,” she said. “I think they are seeking exposure from really balanced participants that are running commercial businesses in the space and are looking to partner with us and create solutions.”&nbsp;



We are in a period of mass expansion when it comes to digital asset adaptation, Sandler said, as evidenced by FDA’s <a href="https://cms.blockworks.co/fidelity-most-institutional-investors-open-to-crypto-want-an-etf/" target="_blank" rel="noreferrer noopener">recent institutional investor study</a>, and regulation will follow.&nbsp;



Regulatory questions will not be easily answered and the road ahead is long, Sandler said, but she is optimistic about the future.&nbsp;



Watch the full interview below and watch all of the panel videos from DAS <a href="https://cms.blockworks.co/events/digital-asset-summit-2021-2/#videoslider0" target="_blank" rel="noreferrer noopener">here</a>. 



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="DAS NYC 2021: Fidelity Digital Assets’ Sandler: The Regulatory Road Will Be Long" width="1024" height="576" src="https://www.youtube.com/embed/yonPa24XMaE?list=PLvER9nHSRN3xZQzlmWTcGxqLJdC2H9Qds" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture" allowfullscreen></iframe>
</div></figure>



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<meta charset="utf-8">Are you a UK or EU reader that can’t get enough investor-focused content on digital assets? <a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Join us</a>&nbsp;in London on November 15th and 16th for the Digital Asset Summit (DAS) London. Use code ARTICLE for £75 off your ticket.&nbsp;<a target="_blank" href="https://cms.blockworks.co/events/das-london/" rel="noreferrer noopener">Buy it now</a>.



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Fidelity Digital Assets’ Sandler: The Regulatory Road Will Be Long

<div id="highlights-block_60f73647eccef" class="highlights">
 <ul>
 <li>Fidelity data shows that 7 in 10 institutional investors hope to gain crypto exposure in the near future </li>
 <li>Of those interested in digital assets, 90% see themselves investing in the asset class within the next five years </li>
 </ul>
 
</div>



Most institutional investors expect to hold or invest in digital assets in the future, according to research from Fidelity Digital Assets’ 2021 Institutional Investor Digital Assets Study.



Seven in 10 institutional investors see themselves gaining crypto exposure going forward, and more than 90% of those interested in digital assets expect to have portfolio allocation within five years, the report indicated.&nbsp;



“A strong indicator of the increased maturity of the digital assets market has been the diversity of institutional participants over the past 12 to 15 months,” said Christine <a href="https://cms.blockworks.co/fidelitys-christine-sandler-on-bridging-the-finance-gap/" target="_blank" rel="noreferrer noopener">Sandler</a>, head of sales and marketing for Fidelity Digital Assets. “Earlier, institutional adoption was driven mainly by crypto native firms and family offices, but we’ve seen an uptick in interest from traditional institutions and financial intermediaries, which is contributing to the year-over-year growth in adoption.”



Just over half — 52% — of institutions surveyed in Asia, Europe and the US currently invest in digital assets. Exposure to crypto is highest in Asia, where 71% of institutions surveyed currently hold or invest.&nbsp;



Institutional exposure to crypto is growing in Europe and the US. 56% of European institutions and 33% of US institutions now have investments in digital assets, up from 45% and 27%, respectively, the year prior.



Institutional investors that are skeptical of the asset class primarily cite volatility and security as top concerns, the report said. But concerns are less prevalent today than they have been in recent years, according to Tom Jessop, president of Fidelity Digital Assets.&nbsp;



“The expectation that the vast majority of institutions will have some exposure to digital assets



by 2026 shows that investors have a deeper understanding of the asset class and have progressed in the three-phase journey from education to adoption,” said Jessop.



The report comes amid a major selloff in the crypto market. Bitcoin, the world’s largest digital currency dipped below $30,000 again Tuesday. It’s a far cry from its all time high of more than $60,000 in April, a run-up that was largely attributed to greater institutional adoption of digital assets. Bitcoin investment products have seen two consecutive weeks of outflows amid the selloff, according to <a href="https://coinshares.com/research/digital-asset-fund-flows" target="_blank" rel="noreferrer noopener">data</a> from CoinShares. Ethereum products have experienced greater investor interest in recent months, the data shows.