Fidelity Digital to Accept Bitcoin Collateral on Cash Loans for Institutions
Fidelity Digital Assets is partnering with crypto lender BlockFi for the new business angle.
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.
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