Will Fidelity Be The Catalyst That Brings Crypto Trading To The Masses?
October 17 2018 - 7:10AM
ADVFN Crypto NewsWire
Cryptocurrencies have had a rough go of it this
year, with the prices of the leading digital tokens including
bitcoin and ethereum plummeting. The knock on virtual currency: it
has failed to take off with the masses as regulators have increased
scrutiny and retailers haven’t embraced it as a payment
method.
Fidelity Investments, however,
could play a role in changing all that.
This week it announced it was
creating a stand-alone company that is focused solely on bringing
cryptocurrency trading to institutional investors. Dubbed Fidelity
Digital Assets, the company will offer institutional investors
custody services, a cryptocurrency platform and advising to its
institutional clients.
Fidelity isn’t going after retail
investors with the offering, but it could help boost the validity
of cryptocurrencies, eventually pushing it downstream to regular
investors. After all, when the CME Group and CBOE World
Markets launched their bitcoin futures in the early part of 2018
most of the online brokerages balked at offering it to their retail
clients. They worried that the price fluctuation and lack of
regulatory oversight could get their customers in trouble. TD
Ameritrade, E*TRADE and TradeStation were among the few to move
full steam ahead but none have come up with a way yet for retail
investors to trade digital tokens directly.
“Fidelity gets it,” said Jason
Davis, former Senior UX Designer at Wells Fargo and current Chief
Executive of Hoard, a platform that enables the integration and
management of both crypto and fiat currencies of its new business
unit. “I wholeheartedly believe Fidelity brings stronger validity
to the marketplace.” While Fidelity is focused on the institutional
side of cryptocurrency trading, Davis predicted it's only a matter
of time before it trickles down to the retail investors, similar to
how other investment products have in the past.
The executive did acknowledge that
the custody model still needs to be proven at Fidelity to give more
validity to the digital token marketplace but if it can, then
cryptocurrency trading may very well take off with the masses.
“There is still a very strong demand appetite” even with the
precipitous decline in the value of the leading digital tokens,
said Davis. “A lot of investors, for the time being, are just
waiting to make their next moves,. Davis predicts that will happen
when bitcoin starts trading between $8,000 and $8,500 again, giving
it a market capitalization of more than $350 billion. As it stands
bitcoin’s market cap has been reduced 70% from its all-time high
reached late last year.
Investors Trust Thier Brokerages, Amazon Over Crypto
Exchanges
Aiming to ascertain what it will
take for retail investors to embrace cryptocurrency investing,
LendEDU, the online student loan lender teamed with The Daily Hodl,
the cryptocurrency news website, to survey 1,000 U.S. adults that
invest via a brokerage account that doesn’t offer cryptocurrency
trading. None of the investors surveyed own digital tokens. The
result: 52% of respondents said they are likely to use their
brokerage accounts to invest in cryptocurrency if they had the
option while 59% of those investors signaled they would scale back
investments in stocks, bonds, and other traditional products to
invest more in cryptocurrency. What’s more, 41% of those
polled said they would trust a traditional brokerage over the likes
of Coinbase, the leading operator of a cryptocurrency exchange. Bad
news for Coinbase: 39% would even trust Amazon.com over Coinbase
when it comes to handling cryptocurrency investments.
“It ties into the overall
perception of virtual currency,” said Michael Brown, research
analyst at LendEDU. “There’s still a dark cloud over virtual
currency and even the name cryptocurrency sounds a little bit
sketchy to be people. They think its used in the dark web and not
for the best reasons. They don’t fully understand.”
LendEDU found that only
44% of the survey respondents who signaled interest in
cryptocurrency investing would do it outside their traditional
brokerage. As for trading in digital tokens via Amazon, that too
could be because of its reputation, said Brown. Amazon and
brokerages have been at it for years, building a reputation of
trust and convenience. Coinbase isn’t there yet, in part because of
the market it is operating it in.
Given the decline in the price of
virtual currency, the increased scrutiny on the part of regulators,
hacks of cryptocurrency exchanges and the wild wild west nature of
it all, Brown was surprised survey respondents not only want to
invest in it but would allocate some of the money going toward
traditional investments to meet that end. “No one wants to miss out
again,” said Brown, nothing there could be some boredom with
traditional investments as well. “People wanted to get in on
the wave and this is residual from that. It was all over the news.
People were seeing every day a person getting rich from investing
in bitcoin.”
Sources:
Forbes
By
Donna Fuscaldo
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