Fidelity’s institutional crypto boss said the firm is taking advantage of the turmoil in the digital assets sector, as clients flee “crypto native” platforms after FTX’s collapse.
Chris Tyrer, head of institutional at Fidelity Digital Assets, told Financial News the firm had seen “a pretty substantial uptick in client activity and deposits owing to the recent events”.
He described the trend as a “flight to quality”, adding that the volatility surrounding the implosion of one of the world’s largest crypto exchanges “has definitely been a positive for us and the role we play in the industry”.
Fidelity launched its digital assets unit in 2018, citing growing demand from clients for crypto-related services. It is among a clutch of financial services giants to have invested heavily in the sector, along with the likes of BlackRock and VanEck.
But while those two firms were bruised by FTX’s collapse, having invested in the firm via their exchange-traded products, Tyrer said Fidelity had “no exposure” to FTX.
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Tyrer recently said his unit was recruiting another 100 people, bringing headcount up to 500 over the coming months, amid a “more straightforward” hiring market caused by the downturn in crypto in 2022. That situation is unchanged by recent events, he told FN on 21 November.
His comments echo those of Goldman Sachs’ head of crypto trading Andrei Kazantsev, who recently told FN that institutional investors are “coming back” to the bank to carry out crypto trades after being spooked by crises at digital assets firms such as FTX.
Tyrer said the reputational hit the sector had taken as a result of the crisis would not spread to Fidelity.
He said that while FTX was an “egregious” example of “poor activity and malfeasance” in the crypto space, it was not a failure of the industry but of “human nature”.
“From our perspective, this is definitely a speed bump for the industry, but I don’t think this is existential,” he said.
READ Abrdn, Amundi, Aviva Investors: FTX collapse a ‘major setback’ for crypto uptake
But he said that institutional activity in the crypto space had “slowed down as people try and take stock of the events of the last couple of weeks, and see where the contagion ends”.
FTX’s implosion has already led to crypto giant Genesis’ lending unit halting withdrawals, and exchange BlockFi gearing up for potential bankruptcy.
In all, FTX owes its 50 largest creditors about $3.1bn, the firm said in a bankruptcy court filing on 19 November, with two unnamed creditors each owed more than $200m.
Tyrer said institutions like Fidelity had made the decision to get into crypto “over years and months of research”, rather than as a result of “FOMO [fear of missing out]”.
“From our perspective, and for the clients that we’re dealing with, not a lot has really changed,” he added.
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