One could make the case that Fidelity’s involvement in crypto is even bigger than Bakkt. As a massive asset manager to the masses, Fidelity’s commitment (albeit from an institutional standpoint at first) will absolutely raise awareness amongst the investing public.
Several sources familiar with the roadmap at Fidelity’s digital assets group told us that the firm has set a date in March to bring their crypto strategy to market.
The crux of Fidelity’s ‘use case’ for their service has to do with custody and Wall Street names that are looking for a ‘named’ trustworthy partner to dip their toes into the crypto waters.
“Custody, a commonplace practice in conventional financial markets like stocks, involves a third party holding onto securities to reduce the risk they’ll be lost or stolen. But while a number of startups have sought to offer the safekeeping service, many Wall Street professionals have longed to work with a large financial services firm, a role Fidelity may fill. Others including Bank of New York Mellon Corp., JPMorgan Chase & Co. and Northern Trust Corp. have explored entering the field. Meanwhile, digital coins are constantly stolen, underscoring the need for better safeguards.”
The other backdrop here is this – Bakkt and Fidelity could be on the cusp of a “Goliath versus Goliath” battle for the hearts and minds (and wallets) of institutional investors as they allocate assets into the crypto space. Fidelity passed on the opportunity to invest in Bakkt nearly a year ago; presumably because they knew they were about to launch their own likeminded solution.
And one marketing note…Fidelity has a leg up on Bakkt strictly from a name recognition standpoint. When you say ‘Fidelity’ very few, if any, investors are going to ask you “who’s that”? When you bring up Bakkt to even sophisticated investors you don’t get the same response – rather, you have to take time to describe what and who Bakkt is.
It remains of interest who hits the markets first. Both Bakkt and Fidelity look to be running neck and neck at the moment.