Wall Street’s Fidelity Investments Loves Crypto

Forget what you’ve been told about Wall Street not liking bitcoin. While Goldman Sachs is peeking its head into the cryptoverse, Fidelity Investments is firing up its own rockets to cash in on cryptocurrency’s trip to the moon.

Wall Street is Not a Plural

If you catch only the major news headlines by popular mainstream media, it might seem as though cryptocurrency is fertile ground for sensationalism. CEOs are cited as “Wall Street says…” when in fact “Wall Street” per se doesn’t possess a bitcoin opinion.

Wall Street may be an eight-block location in lower Manhattan that sets the scene for trillions of dollars worth of asset shuffling, but you don’t need an office highrise next to the New York Stock Exchange to be on Wall Street. Instead, informal criteria dictate that you’re part of high finance and banking’s most sought-after club when you have the capacity to move at least six figures before breakfast.

In truth, no one person or organization can speak for Wall Street; it’s every finance expert for themselves. This is especially true when it comes to cryptocurrency.

Fidelity Investments Means Business

Fidelity Investments manages $2.3 trillion worth of mutual fund assets. The financial services organisation’s 45,000-odd employees brought in a total of US $15.9 billion in 2016. They’re one the largest mutual fund companies in the US and number 19 on America’s Largest Private Companies list.

What is not as well-known is how pro-crypto this formidable Wall Street member is.

Dipping a Toe in Bitcoin Waters

Back in 2013, Fidelity dabbled in cryptocurrency by allowing investors to save their virtual currency for their old-age through an IRA partnership with SecondMarket’s Bitcoin Investment Trust on an individual basis. They did not continue this service, and SecondMarket’s Trust itself was later curtailed by the SEC. But for Fidelity Investments, this initial exploration was only the beginning of a promising relationship with bitcoin and crypto.

Later, in 2015, the investment firm filed for a trademark patent on FIDELITYCOIN, described as “financial services, namely, financial exchange services for virtual currency; electronic wallets; charitable services in the nature of virtual currency.”

Getting Their Feet Wet

In November 2015, Fidelity Charitable was first to market in terms of cryptocurrency adoption when it announced the charity would be accepting bitcoin-based donations via Coinbase.

Charitable’s senior vice president Matt Nash offered their reasoning:

“Enabling donors to contribute bitcoin to their donor-advised funds is the latest example of Fidelity Charitable’s commitment to making it as easy as possible for donors to support the charities they care about with the assets at their disposal.”

This was a good indication of how the company perceives the value of cryptocurrency, as we will subsequently see.

In 2016, Charitable collected US$7 million in bitcoin donations and US$9 million in the first half of 2017 alone.

Diving into Blockchain

In April 2017, the Boston Business Journal reported that Fidelity Labs, the firm’s incubator, had partnered with the Initiative for CryptoCurrencies & Contracts, an academic blockchain research operation. Other notable members include IBM, Intel, Cornell University, and Berkeley.

A month later, Fidelity’s CEO Abigail Johnson revealed at a blockchain conference that Coinbase clients would soon be able to view their bitcoin, ethereum, and litecoin holdings right on the Fidelity website thanks to the Fidelity Full View service. She also exclaimed that she “love(s) this stuff — bitcoin, ethereum, blockchain technology — and what the future holds.”

She also disclosed that thanks to an employee program where bitcoin can be used to pay for canteen lunches, the company had learned about its restrictions as a utility currency. Fidelity employees who are enthusiastic about cryptocurrencies are called “bitcoin vikings”.

Fidelity Mines Crypto

The word ‘mining’ conjures up images of underground tunnels and dirty pickaxes. In the cryptocurrency world, mining equates big business and big bitcoin sums, too.

In what’s been the prestigious investment firm’s most revealing blockchain involvement to date, Johnson revealed that the company mines cryptocurrency. She said:

“We set up a small bitcoin and ethereum mining operation…that miraculously now is actually making a lot of money.”

What This Means For The Future Mainstream Adoption of Crypto

Gina Pieters, economics professor at Trinity University, is of the opinion that Fidelity’s involvement indicates widespread adoption down the line. Says Pieters:

“[P]roof of normalization is in the fact that Fidelity is offering this service. Actions speak louder than words.”

Financial institutions are increasingly showing an interest in cryptocurrencies and blockchain technology. While it’s early days yet, it’s becoming evident that this new tech is here to stay and is set on growing. While everyone in the financial services industry is far from being on board, the discussion is being initiated everywhere. For Fidelity Investments, it’s a discussion that is taking them into the 21st century.

Featured image by: Boston Business Journal