Fidelity’s Embrace of Ethereum Augurs More Institutional Adoption

Investment Giant Sees Post-Merge Ethereum Through ‘New Lens’

Fidelity’s Embrace of Ethereum Augurs More Institutional Adoption

Fidelity Investments, the TradFi asset management goliath, plans to launch Ethereum trading and custody services for institutional clients beginning Oct. 28, according to a memo Fidelity sent to its customers.

The move, which will be executed by Fidelity Digital Assets, a subsidiary of the firm, deepens its commitment to cryptocurrency. Abigail Johnson, Fidelity’s CEO, has been a longtime supporter of digital assets. 

New Lens

Fidelity appears to be increasing its scope with Ethereum after The Merge transitioned to Proof of Stake from Proof of Work consensus.

“With the Ethereum Merge completed, many investors are looking at Ethereum through a new lens,” the memo said, according to screenshots of it that circulated on social media. 

Fidelity manages $4.5T in assets for 40M customers and oversees 401K retirement plans for 23,000 companies. 

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“Fidelity’s entrance into this space indicates wider crypto adoption by institutional investors,” Caroline Bowler, the CEO of crypto exchange BTC Markets, told The Defiant. “The move will allow institutional investors to gain exposure to ETH while mitigating risk around custody, removing a significant institutional barrier to entry.”

The firm launched its Fidelity Digital Assets subsidiary in 2018, enabling institutional clients to hold and trade Bitcoin. Fidelity Digital Assets also offers two exchange-traded funds tracking the metaverse and digital payments sectors.

Deflationary Attributes

“Fidelity supporting crypto trading and custody services is big news for the crypto industry,” Bobby Ong, the co-founder of CoinGecko, told The Defiant. 

Toby Chapple, the head of trading at crypto investment platform, ZeroCap, told The Defiant that cryptocurrencies boasting deflationary attributes are attractive to traditional finance investors.

“Firms like Fidelity and BlackRock are the gatekeepers for very large amounts of potential global investment flow,” Chapple continued. “With the reduction in supply coming over the next year for ETH, especially after the Shanghai fork… it is very hard from a purely trading perspective not to see a price rise.”

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Institutional Adoption

Mark Monfort of web3 venture firm NotCentralised told The Defiant that Fidelity’s announcement is great news for the market. 

“It continues the theme of institutional adoption as we saw BlackRock and their foray into this space with their Bitcoin Private Trust a few weeks ago,” he said. “It’s not surprising that other institutional players are coming into the fold too… Expect more news like this to come from other well-known institutions.”

The memo comes about two weeks after an Oct. 4 filing with the U.S. Securities and Exchange Commission revealed that Fidelity Digital Assets launched an Ethereum Index Fund for accredited investors. The filing said Fidelity had raised $5M for the fund in roughly one week after opening sales on Sept. 26.

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