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Fidelity’s Planned Crypto Exchange: Institutional Involvement In Anti-Bank Assets




The potential opening of a Fidelity Investment cryptocurrency exchange begs the question of how money designed to be independent of banks could be affected by the introduction of an institutional interloper.

Cryptocurrency has always held a contentious relationship with traditional banking. In 2009, the genesis block of bitcoin had embedded in it an indictment of fractional-reserve banking, chosen specifically by Satoshi Nakamoto: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." Cryptocurrency was intended to be a way of transferring value peer-to-peer without the need for a third party.

But the lines are starting to blur. As originally reported by Business Insider, traditional assets manager Fidelity Investments has revealed plans to establish a cryptocurrency exchange. The Massachusetts-based firm is apparently looking for a DevOps System Engineer "to help engineer, create, and deploy a Digital Asset exchange to both a public and private cloud."

According to Business Insider, knowledgeable sources indicate that planning for the initiative has been ongoing for about a year. Fidelity is also looking to staff its Fidelity Digital Assets Service division, aimed at developing "first-in-class custodian services for Bitcoin and other digital currencies."

This will not be Fidelity's first venture across the traditional banking/cryptocurrency demarcation. Currently, certain Fidelity customers can connect their Coinbase accounts to their Fidelity portfolios, allowing for single-window viewing of both their traditional and cryptocurrency holdings. This setup, however, requires logging into Coinbase to execute orders. Having its own in-house exchange allows Fidelity's customers to engage in all market actions from the same platform.

The firm has also reportedly started its own mining operation, its charitable arm accepts donations in bitcoin, and it has made several venture investments into crypto companies. "I'm a believer," Abigail Johnson, CEO of Fidelity, said at the 2017 Consensus conference. "I'm one of the few standing before you today from a large financial services company that has not given up on digital currencies."

But the introduction of traditional finance into the cryptocurrency ecosystem is causing an identity crisis of sorts. Because cryptocurrency started out as the "anti-bank" option, this shift is creating unease for those that count on crypto's independence as a hedge against fiduciary instability.

The larger question may be not if the banks can do without crypto, but if crypto can do without the banks. Some major financial institutions have recently disallowed the purchasing of cryptocurrency using credit. And in some cases, crypto companies have been frozen out of the banking systems of entire nations.

Details about how Fidelity's exchange is expected to function or when it will launch are unclear. ETHNews reached out to Fidelity for comments but received no response by time of press. 

Frederick Reese

Frederick Reese is a politics and cryptocurrency reporter based in New York. He is also a former teacher, an early adopter of bitcoin and Litecoin, and an enthusiast of all things geeky and nerdy.

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