Fidelity Investments CEO Abby Johnson says the financial institution’s Bitcoin custody product has been ‘incredibly successful’ and has opened up a ‘tremendous pipeline’ for investors.
In an interview on Barron’s, Abby Johnson said the rapid development in the Bitcoin was hard to keep up with, but stated that the financial giant was working on infrastructure to help bridge the divide between Bitcoin and the legacy financial industry.
‘Building those on and off ramps around facilitating the trading between fiat currencies and cryptocurrencies is something that’s happening now, and I’m glad it’s moving along,’ said Johnson.
The Fidelity Investments CEO also explained how the company’s decision to start a custody service had even surprised her. ‘I mean that’s kind of the opposite of what it’s all about,’ said Johnson.
Fidelity Investments An Early Institutional Investor In Bitcoin
Fidelity Investments was one of the first legacy financial firms to move into the Bitcoin space. The financial giant started mining Bitcoin as early as 2014, and is known to have tested internal BTC payments at a company café.
Then earlier this year Fidelity launched its custody service, which Abby Johnson said was a necessity for the bigger investors or those who intend to make it part of their legal estate.
Fidelity has been trying out its Bitcoin operations to see how the technology works, and to try and keep one step ahead of its competitors.
Something that might become necessary as distributed ledger technology takes off, and Bitcoin evolves from a store of value to a payments and settlements technology.
Abby Johnson highlighted how she thinks ‘distributed finance’ will be powered by the Lightning Network, a layer two solution that allows for instant and extremely cheap Bitcoin transactions.
Wall Street Hungry For Bitcoin
Fidelity Investments were the first large financial institution to get involved with Bitcoin back in 2014. Starting with mining Bitcoin, the financial giant has been trialling Bitcoin’s technology ever since, and is now bridging the gap between the legacy and Bitcoin worlds.
But it’s not just Fidelity that is hungry for Bitcoin. Investing legends Paul Tudor Jones and Stan Druckenmiller are bullish for Bitcoin, and several public firms have started making Bitcoin a part of their balance sheet.
Software analytics firm MicroStrategy made the biggest splash, using $475 million of its liquid treasury to buy Bitcoin. CEO Michael Saylor likened his company’s cash treasury to a ‘melting ice cube’ and said having looked at all other options, Bitcoin was by far the most logical.
Microstrategy has since doubled down on its investment and has issued $650 million in corporate bonds, at a very favourable rate of 0.75%.
The proceeds of the bonds is to be spent buying Bitcoin, and the favourable rates have led many to speculate that it was offered by a large institution, which can’t legally get access to Bitcoin.
Only last week Insurance giant MassMutual used part of its treasury to buy some Bitcoin. The Fortune 500 firm announced they were getting exposure to the Bitcoin market and spent $100 million buying around 5265 bitcoins.
As well as buying Bitcoin, MassMutual also invested $5 million equity stake in NYDIG – a cryptocurrency custodial platform with over $2.3 billion AUM.
The desire from Wall Street for Bitcoin is clear, and as time goes by we can expect many more purchases from established corporations and institutional funds.
It’s without question Abby Johnson and Fidelity Investments are bullish on Bitcoin, but its becoming more apparent the whole of Wall Street is.