Fidelity Investments Will Begin To Accept Bitcoin As Collateral

Fidelity Investments Will Begin To Accept Bitcoin As Collateral

With each passing day, the world is gradually integrating cryptocurrencies into its system, from the digital currencies being accepted as a mode of payment to it being used as payment for international trade. The interest cryptocurrencies have been attracting of late has been on the uprising, particularly from financial institutions and technology companies—the latest being the Boston based investment giant, Fidelity Investments. The company in a bid to demonstrate faith in the leading cryptocurrency Bitcoin has now given it customers an option to use Bitcoin as collaterals for loans.

Fidelity enlists BlockFi in the latest development

It is expected of the company’s Digital Asset arm to handle transactions related to the new policy in collaboration with crypto lender BlockFi. Fidelity, who started a Bitcoin custodial service on BlockFi to integrate its system with the cryptocurrency giant and is a large investor in BlockFi will hope that the relationship between them will solidify this new service.

Tom Jessop, Head of Digital at Fidelity, believes that crypto investors such as crypto miners are looking to turn their digital assets into cash. He also believes that the Bitcoin-backed loans were a “foundational capability” and expects that as crypto grows, so too will these loans.

He further confirms that customers will be able to access the Bitcoin-backed loan if they have a BlockFi account. BlockFi CEO, Zac Prince, who commented on this partnership with Fidelity investments, confirms that the online lender will offer cash worth 60% of loan collateral. This is a service they already offer their retail customers, and according to Prince, having a firm as big as Fidelity on board will allow more personalization.

Crypto continues to steal the headlines

It is not a surprise that cryptocurrencies continue to get massive attention, with leading currency Bitcoin which has grown more than 400% since its March lows. The market prices might be fluctuating, but analyst and investors believe that it is normal and expects to see record-breaking prices before the end of 2020.

It is worthy to note that this might be the first time for Fidelity customers to obtain cryptocurrency-backed loans, it is not the first for crypto traders who have utilized the option through decentralized finance (DeFi) platforms. DeFi platforms without know your customer (KYC) information, offer loans of stablecoins by putting up Bitcoin or Ethereum for customers.

Fidelity Investments, based in Boston, Massachusetts, is a privately-owned investment management company that was established in 1946 as a mutual fund company. It offers a range of services including fund distribution and investment advice, wealth management, life insurance, retirement services, and securities execution and clearance. With over 26 million customers, $6.5 trillion in total customer assets, and more than $2.4 trillion in global assets under management, it poses as one of the largest investment firms in the United States.

David Pražák