Fidelity’s Crypto Wing Seeks NY State Trust License

fidelity crypto new york trust

Fidelity Digital Asset Services (FDAS) recently applied for a trust license in the state of New York. Does this mean mass crypto adoption is on the way?

Everyone Wants a Slice of Crypto Pie

Rumor has it Fidelity Digital Assets (FDAS) officially filed an application to operate as a trust in the U.S. state of New York. According to The Block, Fidelity’s cryptocurrency arm filed an application with the New York Department of Financial Service (NYFDS) and if approved the institutional brokerage will be allowed to offer crypto-custodial services in the state. 

The approval would also allow FDAS to compete with the likes of Coinbase, Gemini and Paxos. ICE’s Bakkt is also awaiting approval from NYDFS and the will directly compete with Fidelity. According to Arthur Long, a lawyer from the firm Gibson Dunn, a trust license is “more expansive” than a as it permits service providers to offer a much broader array of services in financial markets. 

Fidelity Plans to Offer More than Custodial Services

Bloomberg previously reported that FDAS was planning to move beyond crypto-custodial services and looking to provide trading services on part of institutional clients. Insiders familiar with FDAS’ plans said the brokerage has also been meeting with traditional asset managers and crypto-specific firms to offer services. Currently, the firm has former Barclays’ Head of Digital Assets Chris Tyrer on board, along with former Coinbase executive Christine Sandler, who heads FDAS sales. 

Given the length of time Bakkt has been waiting for approval, it could be a while before FDAS receives approval. Long explained that the approval to operate as a Limited Purpose Trust Company is extremely rigorous and he said the process could take up to 6 months. In May Long told The Block: 

Any bank or trust company is going to have to go through a substantial process so that the regulators understand the business.

While crypto investors are extremely excited about FDAS’s plans, it’s unlikely that services for retail investors will be made available any time soon. FDAS head Tom Jessop previously said that: 

We are not prop trading, we don’t have a desk. We are purely acting as effectively an agent, and that’s what our clients want. Our clients want to avoid the issues associated with funding on multiple exchanges, both administrative risk, or otherwise, they want something resembling the best price experience, and so we’ll try to do that by bringing liquidity onto our platform.

Institutions have the Long Game in Mind

What’s clear is that are taking a bird’s eye view of the growing cryptocurrency sector and for them, time is nothing more than a luxury. Even though Bakkt has not been approved to operate as a Limited Purpose Trust Company in New York, the still plans to conduct a test launch on July 22 and traders will be watching the charts closely to see if Bitcoin price action is impacted by the launch. 

Do you think Bitcoin price will go straight for the stars if FDAS and Bakkt are approved by NYDFS? Share your thoughts in the comments below! 

Images via Shutterstock

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Post written by our friend Eustace Cryptus and Syndicated from Bitcoinist
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