hit counter

The Fintech Files: Fidelity’s 1,800% digital asset boom and how crypto is rewriting UK law

Now, on this side of the pond, the investment manager has seen a massive 1,804% increase in revenue from its fledgling digital assets business as more institutional investors flocked to crypto.

Revenue jumped to £758,950 in 2021, up from £39,856 in 2020. Still, the loss widened as the company launched a hiring campaign.

On a global scale, Fidelity Digital Assets plans to hire 110 technical staff, including engineers and developers with blockchain expertise, to build digital infrastructure to support cryptocurrency services beyond Bitcoin.

Revenue will continue to grow in 2022 “with increased custody and trading operations” as new customers come on board, Fidelity said.

Separately, fintech startups are following Fidelity’s bitcoin retirement plan, with several providing or planning to provide consumers with access to crypto, primarily through individual retirement accounts.

UK Crypto Hub latest

Proposals to rewrite UK property laws to accommodate cryptoassets have been well received by the industry, with commentators saying they would likely contribute to the government’s goal of making the UK a crypto hub.

The Law Commission, whose proposals are usually adopted by the government, said on July 29 that personal property laws should be amended to include a separate category for non-fungible tokens and cryptocurrencies (among other so-called data objects).

If passed — which is likely — the reforms would help crypto investors reclaim funds lost through legal action in hacks or fraud, and provide courts with the power to rule on token ownership.

The change “should give the UK a competitive edge, certainly from a regulatory safety perspective,” said Charley Cooper, chief executive of blockchain firm R3.

Don’t read this on the beach…

Meanwhile, the Financial Conduct Authority kicked off August with a detailed update on how it plans to approach risky investments, including crypto.

But for a 205-page policy document, it contained little fact politics about how it will regulate the industry – especially given that the proposals are subject to any subsequent legislative changes.

The regulator wants investors to keep their crypto asset holdings at 10% of their net worth by including crypto in the medium risk category, which also includes crowdfunding investments.

Ari Redbord, a former US Treasury Department financial adviser who is now the head of legal and government affairs for blockchain intelligence agency TRM Labs, said the document’s wording was an “aggressive warning” rather than a caveat.

The move is likely to “enforce careful thought before taking the plunge into what the FCA believes are risky investments,” he said

Iskandar Vanblarcum, the general manager of crypto exchange OKCoin’s European operations, meanwhile, was quick to resist any suggestion that people’s crypto holdings should be capped.

“Rather than controlling the amount people can invest, policymakers should prioritize setting standards for companies in the industry, particularly around transparency and how investors’ funds are handled after they’ve been deposited,” he said.

across the pond

When it comes to the ongoing debate over whether crypto tokens should be listed as securities, Binance seems to be playing it safe.

Binance.US, the US arm of the world’s largest crypto exchange, has delisted AMP token, a small cryptocurrency with a notional market value of less than $400 million. It follows the Securities and Exchange Commission’s investigation into insider trading at rival Coinbase.

AMP is significant because it was one of nine tokens listed as unregistered securities by the SEC as part of its investigation of Coinbase.

Elsewhere in crypto

The growing crisis of confidence in Coinbase showed no sign of abating as high-profile US investor Cathie Wood dropped more than 1.4 million shares of the embattled crypto exchange through her investment firm Ark Invest.

The Securities and Exchange Commission has indicted 11 people for creating an alleged crypto pyramid scheme that has raised more than $300 million from millions of investors. The founders of the company, named Forsage, last lived in Russia, Georgia and Indonesia, the SEC said.

Finally, the Federal Reserve has written a request to Voyager Digital — a crypto broker that has filed for bankruptcy — to stop marketing itself as insured by the Federal Deposit Insurance Corporation.

As of August 2, Voyager’s website was dominated by a banner that read, “This website is being updated as we go through a voluntary restructuring process and work to restore services to our mobile and web platforms.”

To contact the author of this story with feedback or updates, email Alex Daniel

Leave a Comment