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- The president of Fidelity Digital Assets, Tom Jessop, has indicated in a recent interview that Ethereum could be supported in 2020.
- Jessop believes that the custody service is the key to attracting institutional investors. From a liquidity point of view, there is “a lot of work”.
In the latest episode of “The Scoop” podcast, Frank Chaparro spoke with Fidelity Digital Assets President Tom Jessop about the support for Ethereum in 2020 and the custody service of cryptocurrencies as an essential basis for institutional investors to enter the crypto market. Fidelity, the Boston-based financial giant, manages $2.8 billion of assets and announced in October a Bitcoin “enterprise-quality custody and trade execution service” for hedge funds and financial advisors.
As Jessop explained in an interview with Chaparro, his team has “done a lot of work on Ethereum”. If customer demand exists, Fidelity Digital Assets (FDAS) could support Ethereum in 2020. Jessop cited a relatively low demand for altcoins as the reason why Fidelity Digital Assets has so far focused only on Bitcoin (BTC). Because Bitcoin has the longest track record, most institutional investors want to invest in Bitcoin first, Jessop stated:
How do I know that if I buy this thing, it’s gonna be around tomorrow? Like what indication of durability or longevity do I have based on the fact that the history of this asset is 10 years old?
Already at the beginning of the year there were rumours that Fidelity could support Ethereum (ETH). However, Jessop said at the time that Ethereum’s regular hard forks were a technical obstacle.
Fidelity could pave the way for institutional investors
Just recently in November, FDAS received a license from the New York regulatory authorities to offer a custody service to institutions and private investors in the state of New York. This news was considered very important by many experts, as much of the American assets are managed and traded in New York.
As part of the new podcast, Jessop also discussed the role of custody solutions for institutional investors. He explained that a reliable custody service is a basic requirement for the entry of new investors into the crypto market. According to Jessop, new investors need to feel secure. The rest, especially trading, then develops by itself. However, the president of FDAS also stated that the company thinks in larger periods of time:
We are an organization that’s been around for decades, and we’re not necessarily thinking about the next 18 to 24 months, really thinking about three plus years in terms of the evolution of the space, and what it potentially means for financial services at large.
Furthermore, Jessop is currently observing a trend that favours over-the-counter (OTC) trading over spot trading. He explained that there is currently better liquidity available from OTC providers as certain investors are more interested in obtaining liquidity through OTC trading than through exchanges. However, he also added that this may change.
Currently, however, some institutions are reluctant to invest because the liquidity of the crypto market is too low. The underlying market liquidity is not currently ready for billions of dollars of new capital flowing into Bitcoin. Large institutions are therefore considering twice whether to invest:
From a liquidity standpoint, there’s a lot of work that needs to be done.
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