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Fidelity Digital Assets to add first crypto exchange by end of 2019; Counterparty needs to pass strict evaluation

Fidelity Digital Assets is set to add its first crypto exchange by the end of the year in an attempt to add traditional small players and retail investors into the crypto fold.

Image: Fidelity Digital Assets website

Mon, 25 Nov 2019, 03:13 am UTC

Fidelity's crypto arm Fidelity Digital Assets (FDAS) is expecting to add its first crypto exchange by the end of the year, FDAS head Tom Jessop told CoinDesk.

The crypto brokerage firm aims to connect more sophisticated institutional players to the crypto industry by providing a safe way to store, sell, transfer and purchase Bitcoin. At the moment, these transactions are primarily done through an over-the-counter desk and are only catering to high-volume traders.

“Between launching our trading platform five months ago to year-end, we will have more than doubled the number of liquidity providers,” he said. “We are primarily focused on OTC liquidity providers. It's likely we will connect to our first exchange perhaps before year-end.”

This could see FDAS tapping retail investors and smaller players, a move that could open up the possibility of mass adoption.

But there are complications. An FDA spokeswoman admitted that OTC desks are easier to onboard compared to exchanges and deep scrutiny is needed before a partner is given the green light.

A strict screen process

“We apply a very high standard of counterparty evaluation, involving rigorous risk management and onboarding process. This approach is something we’ve been able to apply to OTC desks with post-trade settlement more readily than working with an exchange,” the spokeswoman said.

Last week, FDAS successfully secured a trust company charter by the New York Department of Financial Services (NYDFS) to operate in the Big Apple. The company highlighted three major service foundation for FDAS: institutional-grade custody of digital assets, smart trade transactions, and rigorous client support to ease the transition.

Galaxy Digital to partner with FDAS

Fidelity is using its expertise in the traditional trading market and the best strategies in the crypto industry to deliver a solid service to its would-be clients. So far, the investment firm has yet to name the exchanges that will be joining its fold. However, Galaxy Digital has confirmed that it will be partnering with Fidelity to custody its two new Bitcoin fund, the Galaxy Bitcoin Fund, and the Galaxy Institutional Bitcoin Fund.

Meanwhile, Bitcoin’s price has been falling down in recent weeks and is currently at $6,730, down from the $9,000 levels it recently enjoyed. The bearish trend is further worsened by China threatening to crackdown on crypto exchanges that are operating in its borders.

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