Fidelity Digital Assets plans to increase headcount by 70%

Fidelity Digital Assets, a subsidiary of asset management giant Fidelity, plans to increase its headcount by about 70% as demand for cryptocurrency services remains strong among institutional investors.

Fidelity Digital Assets President Tom Jessop said in an interview that the company plans to add about 100 technical and operations staff in Dublin, Boston and Salt Lake City. He said the employees will help the company develop new products and expand into cryptocurrencies beyond Bitcoin.

Jessop believes that last year was "a real breakthrough year for the space because interest in Bitcoin accelerated when the coronavirus pandemic began." Earlier this year, Bitcoin hit an all-time high of more than $63,000, and other cryptocurrencies including Ethereum also rose to all-time highs before falling by about half in recent weeks. Until now, Fidelity Digital has only provided custody, trading and other services for Bitcoin.

“We’ve seen an increase in interest in Ethereum, so we want to get ahead of that demand,” Jessop noted.

He said Fidelity Digital will also push to offer trading services most days of the week. Cryptocurrencies can be traded all day every day, unlike most financial markets which are closed in the afternoons and on weekends. "We want to be a place where we can offer full-time services most days of the week."

As cryptocurrencies and decentralized finance gain more mainstream acceptance, money continues to pour into the space, funding startups and new ways to conduct traditional financial transactions.

Venture capital funds have poured more than $17 billion into blockchain-based projects this year, according to data provider PitchBook. That’s the most money raised in any year so far, and nearly as much as all of the previous years combined. Companies that have raised money include Chainalysis, Blockdaemon, Coin Metrics, Paxos Trust Co., Alchemy and Digital Asset Holdings LLC.

In addition to holding and trading Bitcoin, Fidelity Digital has also partnered with blockchain startup BlockFi Inc to allow its institutional clients to use Bitcoin as collateral for cash loans.

Jessop said demand from institutional investors looking to gain exposure to Bitcoin, Ethereum and other digital currencies is rising. Fidelity Digital's first clients tended to be family offices and hedge funds. Now it is expanding to retirement advisors and companies looking to invest in cryptocurrencies as an asset class.

“Bitcoin has become an on-ramp for a lot of institutions. It’s really opened a window now into what else is happening in the space.” One big shift, he said, is the “diversity of interest” from new and existing clients.