Fidelity Investments is on the hunt for a new fund manager for a cryptocurrency fund that the company has in-house. Citing people familiar with the matter, Business Insider reported that key members of the cryptocurrency fund left the Boston-based fund company, and as a result, the fund is inactive for now.
The internal cryptocurrency fund, according to the report, was launched in the fall and bankrolled from Fidelity’s balance sheet. The idea is to invest in cryptocurrency assets. The investment vehicle, noted the report, was invested in digital tokens before the two senior members – Matt Walsh and Nic Carter – left the firm to start their own cryptocurrency-focused venture capital firm Castle Island Ventures. Their departure has prompted Fidelity to search for replacements, Business Insider reported.
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In addition to looking for replacements for the internal crypto fund, which invests in digital tokens as well as crypto-focused companies, Business Insider reported that Fidelity is looking to boost the employees who could help it build a cryptocurrency exchange and digital asset custody business. That, noted the report, could legitimize the market, which is prone to wild swings in prices and increased oversight by regulators. Take bitcoin, the leading cryptocurrency, as one example. In December, it was trading close to $20,000, but it is now around $6,700.
Last week, speculation surged that Fidelity Investments was gearing up to build a digital currency exchange after Coin Telegraph, citing internal correspondence, reported that the Boston-based fund company is hiring developers for the exchange. According to the report, executives at Fidelity notified employees that the company is seeking a DevOps system engineer “to help engineer, create and deploy a digital asset exchange to both a public and private cloud.” Another job posting said the company is looking to offer “first-in-class custodian services for bitcoin and other digital currencies.” Unlike some Wall Street players who have expressed skepticism about bitcoin, Fidelity’s chief executive Abigal Johnson has been a proponent for some time.
Fidelity isn’t the only brokerage looking to create a crypto exchange. TradeStation, the online brokerage for active traders, is aiming to hook up with Coincheck, the Japanese cryptocurrency exchange acquired by parent company Monex Group, Inc. (MNXBF). Since acquiring Coincheck, which was the subject of a hack and is facing increased regulation, Monex has been working to reopen it. TradeStation president John Bartleman said that, once Coincheck is up and running again, the brokerage will look to integrate with the exchange. The executive noted that Choincheck should get the nod from Japanese regulators some time in June.
At the same time that TradeStation works on integration with Choincheck, Bartleman said that the online brokerage will explore other ways to bring cryptocurrency trading to its customers, including partnering with another existing exchange. “We’re actively talking to an exchange in the U.S.,” said Bartleman. “We’re also talking with another startup solution that we may go live with.” The executive declined to name the exchange and startup that TradeStation is in discussions with.