Fidelity Digital Assets launches its cryptocurrency exchange at the end of the year expanding its market and obtaining more liquidity for smaller operations
The cryptocurrency-based business announced that it expects to sign its first exchange by the end of the year, according to its president Tom Jessop.
FDAS helps institutional investors obtain the best deal by buying or selling bitcoins from various sources. So far, all have been via over-the-counter commercial desks (OTC). FDAS was launched in October of last year.
“Between the launch of our trading platform five months ago until the end of the year, we will have more than doubled the number of liquidity providers.
We are mainly focused on OTC liquidity providers. We are likely to connect to our first exchange perhaps before the end of the year. ”
Fidelity Digital Assets brings its first crypto exchange
The measure would probably give FDAS access to a wider market and liquidity for smaller operations. OTC desks trade primarily with larger institutions and large investors (whales), while exchanges serve retailers and smaller institutions.
The Research Director at Tradeblock said:
“An exchange has more small order activity and is more complete than an OTC counter that can rely more on relationship-driven activity and is mainly used for larger block operations.”
FDAS, a unit of Fidelity Investments, is one of several companies trying to link Wall Street with the wild world of crypto, along with Bakkt, the bitcoin futures market launched this year by Intercontinental Exchange. It is a bold challenge. For example, OTC desktops have been easier to incorporate than exchanges, FDAS discovered.
A spokeswoman pointed:
“We apply a very high standard of counterpart evaluation, which implies a rigorous risk management and a process of incorporation.
This approach is something we have been able to apply to OTC desktops with post-negotiation settlement more easily than working with an exchange. “
Incorporation of important clients
FDAS won a license from the New York Department of Financial Services. The license allows FDAS to incorporate New York customers and gives the company more credibility with fiduciary clients seeking a custodian with a trust license.
While Jessop would not name New York customers that FDAS is incorporating, Galaxy Digital recently announced that it was using FDAS and Bakkt to guard its two new bitcoin funds.
Other customers in New York will be approached in the next five to six weeks, Jessop said.
It is reported that FDAS has a diverse client base, which includes hedge funds, family offices, an investment advisor and a small pension fund based in the United States.
“The interest in that segment (of pension funds) is there.”
He added that after FDAS has entered New York customers, it plans to start incorporating new assets. Also, develop your business capabilities, expand your business and seek licenses in other states where you are not currently doing business.
As a private company, Fidelity has been able to experiment with innovative technology without worrying about short-term payments. An R&D division, the Fidelity Center for Applied Technology (FCAT), has studied crypto space closely, including extracting bitcoins.