Fidelity Digital Assets, the crypto arm of Fidelity Investments, a leading asset manager, has partnered with BlockFi, a renowned crypto lender, to let its institutional investors engage BTC as collateral against cash loans. A report unveiled the news on December 7, noting that Fidelity Digital Assets will only own the crypto and will not play any role in setting the terms of the loan. Apparently, this offer targets BTC investors looking to convert their BTC to cash without selling. As such, potential clients will be hedge funds, crypto miners, and over-the-counter (OTC) trading desks.
According to report, this collaboration will give Fidelity Digital Assets clients access to additional liquidity for their daily operations without forcing them to lose a long position on their BTC. However, customers would have to create a BlockFi account to get the loans. Commenting on this development, Tom Jessop, President of Fidelity Digital Assets, said holding BTC to secure loans is a fundamental ability. He added that the company hopes this capability will be an important part of the ecosystem as the crypto market continues to grow.
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Jessop further indicated that he viewed the loans as long term instead of a typical repo transaction. According to him, such loans are a kind of tripartite agreement, well known to everyone on Wall Street. He concluded by saying that Fidelity Digital Assets seeks to create a world class brokerage service for all types of assets.
According to BlockFi CEO Zac Prince,
“BlockFi will manage the risk of Bitcoin’s infamous volatility by offering liquidity worth 60% of a loan backed by digital assets. However, the program allows for customization at the customer level and can be adjusted to meet the needs of large businesses. “
Growing demand for crypto-related products
A representative from Fidelity Investment revealed that the offer comes after the organization’s clients demanded an increase in capital efficiency. The representative went on to say that the company’s full service offering includes custody and trading, adding that Fidelity will continue to help institutions maximize capital efficiency while prioritizing the security and immobility of assets. .
The news comes after Fidelity Investments conducted a survey earlier this year and found that institutional investors are increasingly interested in crypto. According to results, around half of institutional investors believe digital assets are worth keeping in portfolios. Apparently, the survey interviewed 441 institutional investors and found that 72% of respondents prefer to buy investment products that hold digital assets. Meanwhile, 57% of respondents preferred to buy cryptocurrencies directly.
The survey also found that 47% of institutional investors believe cryptocurrencies are worth investing. 47% said they appreciated crypto for its innovation, and 46% of respondents praised the low correlation between crypto and other assets.
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