Fidelity Digital Assets will allow its institutional customers to use bitcoin as collateral against cash loans, according to a press release Wednesday.
- The new service will target bitcoin investors who are keen to turn their holdings into cash without selling, as well as hedge funds, miners and over-the-counter trading desks, Tom Jessop, president of Fidelity Digital Assets, said.
- The Fidelity Investments subsidiary will hold the cryptocurrency and not make loans itself.
- Partnering on the initiative is crypto lender BlockFi, which will help manage risk by offering cash worth 60% of a loan backed by bitcoin, according to the firm's CEO, Zac Prince.
- “As the markets grow, we’d expect that this becomes a fairly important part of the ecosystem,” said Jessop.
- In order to receive the loan, a Fidelity customer will have to have an account with BlockFi.
- Last November, Fidelity Digital was granted a trust company charter from the New York Department of Financial Services, allowing the firm to custody bitcoin for institutional investors.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.