Fidelity Gets Green Light to Launch Bitcoin Trading Platform

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Fidelity Investments has bagged approval from regulators to offer bitcoin trading and custodial services in New York.

The Boston-based financial firm, which has $2.8 trillion worth of assets under management, on Tuesday announced that the New York Department of Financial Services (NYDFS) has permitted it to launch a new digital assets subsidiary. The department licensed the newly-formed Fidelity Digital Assets to offer institutional investors services to purchase, sell, trade, and transfer bitcoin.

“The custody and trade execution services that we provide are essential building blocks for institutional investors’ continued adoption of digital assets,” said Michael O’Reilly, Chief Operating Officer of Fidelity Digital Assets.

The senior executive noted that DFS gave their bitcoin service much-needed credibility, especially before institutions that showed resilience when it comes to putting money in the cryptocurrency market. As a non-sovereign entity, bitcoin met with suspicions from both regulators and investors alike. Its widely criticized use in financing illicit operations online, coupled with growing number of investment scams, kept investors in doubt about its prospects as a financial asset.

Nevertheless, bitcoin grew its adoption and market capitalization, showing resilience to all kinds of criticism. And when big financial firms like Fidelity started exploring the cryptocurrency for its possible inclusion in the mainstream, it gained further legitimacy before an otherwise wary group of institutional investors.

“Institutions have specific expectations and requirements that we know and understand,” wrote Fidelity in its press announcement. “For example: Audited Operations; Regulatory Oversight; Institutional Account Structures; [and] Risk Management Practices […] From the security and risk management of our custody offering to our world-class client service, we’ve created the blueprint for institutional-grade standards for the digital assets industry.”

Cautious Regulators

Regulators also took their time before approving a bitcoin-related business, acknowledging the risks of fraud and price manipulation plaguing the industry. Ever since rolling out BitLicense in 2017, DFS only licensed 23 cryptocurrency organizations. Earlier this year, the department had granted Bakkt, a digital assets platform, to list its two bitcoin futures products on the Intercontinental Exchange.

“This approval is further evidence that innovation and consumer protection can coexist in New York’s evolving and expanding financial services industry,” said Linda Lacewell, the DFS’s superintendent of financial services.

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