Fidelity's crypto custody & asset management is live

Fidelity rolls out custody & services to select clients amidst the bear market & fees investigation

With the rumors that were occurring back from it’s October Announcement , Fidelity’s custody services in their new company named Fidelity Digital Asset Services was much anticipated.  However, there was no clear launch date for this.  It has been a pleasant surprise that the sleeping giant:  Fidelity has already been off to the races running this in the background over the past few months with select institutional clients consisting of high net worth individuals, and family offices.  According to cnbc, when they interviewed over 450 institutions, 22% of them already have holdings in crypto.  With them being a 72 year old family controlled  business,  they have been known to invest in innovation such as ai, big data, and now blockchain which doesn’t bring this news to a surprise.  They will be trading and handling custody for these clients with exposure to digital assets.

With all this excitement, something to also keep on the radar as noted by Forbes  is that the Labor Department is investigating Fidelity for fees such as the latest infrastructure fee.  One thing that differentiates them from the Wells Fargo investigation is that they were willing to show all the partnership agreements & terms.  According to Forbes,

“in response to the 2016 SEC public Guidance, financial intermediaries and mutual fund firms may have modified their business practices related to distribution fees and retirement accounts.

Regulators and mutual fund investors should be aware that financial intermediaries, such as Fidelity and Wells, are solely responsible for:

1.    creating complex arrangements which require funds to make distribution-related payments;

2.    demanding funds withhold full disclosure of the terms and conditions of these distribution-related payment arrangements from regulators and investors; and

3.    requiring fund firms, if they opt to disclose such agreements at all, use disclosure language specifically prescribed by the intermediary and to refrain from disclosing actual dollar amounts.”

This type of information asymmetry when it comes to hidden fees is what creates more concern and provides more opportunity for a more open and transparent system where fees are seen, immutable across all participants.  It will be exciting to see how this evolves over time.