The crypto division of brokerage giant Fidelity has officially applied to operate in New York as a trust.
NY Trust License
According to sources familiar with the situation, Fidelity Digital Assets has filed an application with the New York Department of Financial Services (NYDFS) for a Trust license. If granted approval, New York would join the shortlist of states in which Fidelity operates its cryptocurrency custodial services.
Fidelity’s digital asset division was first launched in October 2018 and currently only serves institutional clients. The move to gain a Trust license in New York would allow the brokerage to compete with Coinbase, Gemini, and Paxos, who already hold the designation. They are also joining a waiting pool including Intercontinental Exchange’s Bakkt, which has a pending application for a trust to store bitcoin for their futures contract trading.
Fidelity appears to be broadening its services in the market of cryptocurrency. A report by Bloomberg in May claimed that the company was planning to expand its brokerage tools to allow crypto trading on behalf of clients.
However, they may be forced to wait on gaining approval for their Trust license.
Long Wait Ahead
Arthur Long, a lawyer for Gibson Dunn, explained that the NY trust license is “more expansive” than the BitLicense. The BitLicense is the much-maligned regulatory qualification required by the state of New York for cryptocurrency firms to operate. Gaining a trust designation would allow Fidelity even more latitude in their crypto offering, including the ability to provide financial advice.
Despite being a tour-de-force brokerage, Fidelity is going to have to wait its turn before operating as a Limited Purpose Trust Company. Long told The Block in May that obtaining a trust license from the NYDFS often takes half a year.
“Any bank or trust company is going to have to go through a substantial process so that the regulators understand the business.”
Fidelity Goes Crypto
Nonetheless, the brokerage appears committed to establishing itself as a real player in the marketplace of crypto. Fidelity Digital Assets head Tom Jessop explained to The Block that they are focused on fulfilling the needs of clients,
“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 providers, and other sources of liquidity to our platform.
Fidelity gaining momentum in digital assets could be another indicator that crypto is heading mainstream in 2019.