Fidelity Investments, one of the biggest providers of 401(k) services and retirement products to Americans, is planning to build a digital asset exchange, the info was leaked through a job ad looking for a DevOps system engineer “to help engineer, create, and deploy a Digital Asset exchange to both a public and private cloud.”
Other established financial institutions, such as Goldman Sachs, the New York Stock Exchange, and Nasdaq have made attempts to move into the nascent crypto market. However, if Fidelity is successful in launching a digital asset exchange, it would be perhaps the largest move by a distinguished Wall Street firm to date and could help further legitimize the growing crypto market.
Last year around this time, Fidelity announced an integration with Coinbase, in a partnership that allows Fidelity customers to view their bitcoin holdings within their Fidelity account. Coinbase announced today it is still on the path to be able to list security tokens. Could the two companies be in partnership for the exchange? Last month Coinbase acquired decentralized token trading protocol Paradex.
See below a few thoughts on the news from a few crypto CEO’s:
“When a firm like Fidelity commits significant resources to open a digital asset exchange, it reaffirms the growing demand for regulatory compliant conduits for crypto assets. The crypto space is quickly becoming more and more mainstream as the assets have proven to be more than just a fad. The advent of security token exchanges will be another big step in mainstream adoption of these revolutionary assets.”
“Although the crypto space is still in its infancy, Fidelity committing resources towards a digital asset exchange is indicative of the market’s rapid maturation. It’s worth recognizing that the industry most impacted by impending blockchain application is financial services — big banks, insurers, and credit providers stand to gain significantly from the overturning of legacy processes and the mess of regulatory intervention, leading the blockchain revolution at the enterprise scale.”
“Cryptocurrency exchanges are faced with security issues that differ from traditional websites and even banks. While companies like Target run the risk of compromising its customers’ personal data, crypto exchanges run the risk of irreversibly losing hundreds of millions of dollars. The consequences in these cases are more dire and could in some cases mean the end of one’s business. While it’s great that a company like Fidelity is moving towards blockchain and digital asset adoption, the risk factors associated with the move are that much greater. Fidelity will potentially introduce a large number of users onto its exchange, which by extension, means a large amount of assets being moved around. Fidelity could expose themselves as hacker bait — the greater the bait, the more motivated hackers will be to get inside. To preemptively avoid being hacked, Fidelity should partner with a third-party source capable of understanding the complexities that come with digital asset exchanges. In its move into cryptocurrency trading, Nasdaq brought Gemini onboard to help increase oversight on fraud and manipulation. I’d be surprised if Fidelity didn’t follow suit or, at the very least, take on advisors who have a proven track record of working with cryptocurrency exchanges.”
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