According to three people familiar with the project, Fidelity is aiming to launch its Bitcoin custody service in March.
Having an established firm like Fidelity offer custody services is a step towards quelling the concerns and addressing the needs for more traditional players to enter the cryptocurrency world.
It can also provide a useful service to crypto veterans who seek an alternative to personal management.
The service is part of a larger offering designed to cater to large investors who currently cannot meaningfully participate in the sector. While Bitcoin storage will be the first service to be offered, others are coming and insiders suggested that Ether storage is coming next.
Fidelity is currently working with a small pool of clients and plans to “thoughtfully engage with and prioritize prospective clients based on needs, jurisdiction and other factors” over the next period of time, according to a company statement.
Several startups have offered custody services, but large players have desired to work with an established financial services veteran like Fidelity. Custody services are commonplace in the financial world, but for a sector where coins are frequently stolen and exchanges suffer hacks, a desire for an institutional level of security is understandable. Custody services must manage cryptographic keys while fending off hackers while staying within the various regulatory and compliance rules.
Fidelity has been notably crypto-friendly. The firm has mined Bitcoin since as early as 2015, accepted a growing stream of cryptocurrency donations through its charity arm, and has hired from the blockchain/cryptocurrency world.
The custody service is coming from Fidelity Digital Asset Services, an arm of the company which was announced last October. Another goal of the company’s cryptocurrency arm is to execute trades for clients on exchanges. This means the company has planned to allow family offices and hedge funds to submit orders for cryptocurrency trades that Fidelity will then route to the various exchanges and liquidity pools.
“Our goal is to make digitally native assets, such as bitcoin, more accessible to investors,” Fidelity CEO Abigail Johnson said when the company arm was founded. “We expect to continue investing and experimenting, over the long-term, with ways to make this emerging asset class easier for our clients to understand and use.”
The March launch of Bitcoin custody shows that, despite the bear market in cryptocurrency, Fidelity still has the confidence it had in digital assets during the peak of cryptocurrency prices.