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Fidelity Digital Assets has the perfect solution for crypto investors who need more cash but don’t want to sell their Bitcoin holdings. The firm announced a new service that will now allow its institutional clients to use their BTC as collateral for cash loans.
Fidelity Digital Assets (FDA), a unit of the Boston-based asset management firm Fidelity Investments, announced that it will allow institutional clients to secure cash loans by pledging their Bitcoin as collateral, Bloomberg reported. According to FDA CEO Tom Jessop, the new service is targeting BTC investors who want to turn their crypto into cash without selling.
The new service is made possible by FDA's partnership with BlockFi. The company said that potential clients include crypto miners, over-the-counter trading desks, and hedge funds.
The company said that it was the demand from its institutional clientele that prompted it to offer the new service. “We continue to see demand for increased capital efficiency from institutions that maintain long bitcoin positions, and with this collateral agent capability, our customers seeking that efficiency can access more opportunity with the capital that they trust us to keep safe,” FDA head of Sales and Marketing, Christine Sandler, said in a press release.
Fidelity Digital’s decision to accept Bitcoin as collateral is well-timed to take advantage of the rising institutional interest in cryptocurrency. Based on recent data from Fidelity’s research, around 60 percent of institutional surveyed expressed interest in cryptocurrencies compared to the 47 percent expressing the same sentiment in a similar survey conducted in 2019.
“The business and market momentum we’ve seen this year have reinforced our belief that institutional investors are looking for a more comprehensive offering in the digital assets space, and we look forward to continuing to evolve our platform to meet their needs and deliver even greater value to our clients,” Sandler added.
Meanwhile, BlockFi CEO and founder Zac Prince expressed his satisfaction in being able to collaborate with Fidelity to help the latter’s clientele improve their capital efficiency. “Having an ability to finance positions is a critical component of financial services infrastructure and this collaboration reflects an exciting development for the digital asset ecosystem.”
