New capability brings capital efficiency to institutional clients who can now access risk-managed cash borrowing while maintaining unparalleled asset security
Fidelity Digital Assets℠ today announced a new offering that enables clients on Fidelity’s institutional-grade digital assets custody platform to pledge bitcoin as collateral in a transaction. The new capability marks Fidelity’s entrance into the digital asset financing space, strengthening and broadening Fidelity Digital Assets’ existing custody offering, which remains integrated with a trade execution venue for customer liquidity needs. In conjunction with the launch of the collateral agent capability, BlockFi, a leading cryptocurrency lending platform and a CME Bitcoin Futures Block Liquidity Provider, will begin to offer its institutional customers the option to custody bitcoin pledged as collateral in their cash loans on Fidelity’s platform. Fidelity Digital Assets continues to build out its offering to include more of the services that institutions have come to expect from traditional asset classes, sparking new growth opportunities that prompted a recently announced hiring initiative.
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“We continue to see demand for increased capital efficiency from institutions that maintain long bitcoin positions, and with this collateral agent capability, our customers seeking that efficiency can access more opportunity with the capital that they trust us to keep safe,” said Christine Sandler, head of Sales and Marketing for Fidelity Digital Assets. “For Fidelity Digital Assets, this is an exciting first step into supporting the thriving lending market for digital assets and deepens our relationships within the digital assets ecosystem with leading firms like BlockFi which allows us to provide even more institutional-grade solutions to investors in this space.”
“We’re thrilled to be collaborating with Fidelity Digital Assets to help facilitate capital efficiency within their robust digital asset management platform,” said Zac Prince, CEO and founder of BlockFi. “Having an ability to finance positions is a critical component of financial services infrastructure and this collaboration reflects an exciting development for the digital asset ecosystem.”
Demand for Digital Assets Continues to Grow among Institutional Investors
Marrying risk-managed loan agreements with best-in-class custody furthers the opportunities for institutions to enter and grow within the digital asset market. According to Fidelity’s research1, there has been increased institutional appeal in and adoption of digital assets, with 36% of institutions surveyed invested in the asset class and more than 6 in 10 investors highlighting digital assets have a place in portfolios. Driven by public support for the asset class by notable institutional investors and corporate treasurers, as well as bitcoin’s year-to-date price performance increasing upward by over 150%2, Fidelity Digital Assets expects continued growth in demand for bitcoin financing solutions. This surge in institutional investor interest comes at a time of significant monetary and fiscal stimulus and unprecedented policy decisions triggered by the recent worldwide pandemic and an investor search for an uncorrelated store of value asset with upside potential, as highlighted in a recent Investment Thesis report by Fidelity Digital Assets.
“The business and market momentum we’ve seen this year have reinforced our belief that institutional investors are looking for a more comprehensive offering in the digital assets space, and we look forward to continuing to evolve our platform to meet their needs and deliver even greater value to our clients,” said Sandler.
Fidelity has been working for years to develop a blockchain ecosystem, with a heavy focus on research and development and the goal of becoming a holistic solutions provider in the digital assets space.
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