Thomson Reuters
Fidelity Chairman and CEO Abigail Johnson
- Fidelity Investments launched an internal crypto fund last fall to invest the firm's balance sheet in digital assets, according to people familiar with the matter.
- The firm shut the fund, which was very small and exploratory, this spring before two employees involved in the project left.
- Fidelity is also hiring employees to work on services relating to cryptocurrency exchanges and crypto custody.
Fidelity, one of the biggest providers of 401(k) services and other retirement products to Americans, in recent months shut down an internal crypto fund it launched in 2017, according to people familiar with the matter.
The fund, which was small and exploratory, used capital from the firm's balance sheet to invest in crypto-related assets, the people said. It was wound down in spring 2018 before two key members of the project exited Fidelity.
Matt Walsh, a vice president at Fidelity, and Nic Carter, a former investment research analyst at the firm, were both involved with the project and left to start Castle Island Ventures, a crypto-focused venture capital firm, the people said. Walsh and Carter could not be reached for comment. A spokeswoman for Fidelity declined to comment on the exits. Business Insider is awaiting a response on the fund itself.
The project, which has not been previously reported on, shows the extent to which Fidelity - by wagering its own capital -is diving into the nascent market for digital currencies.
The funds firm is also looking or talent to build its own crypto exchange and digital asset custody business, Business Insider reported last week. Such an offering could help legitimize the burgeoning crypto market, market structure specialists said.
Other established Wall Street players are also weighing their own moves into crypto. Goldman Sachs has a team dedicated to building out a trading operation tied to crypto, and the New York Stock Exchange is reportedly building a crypto trading platform.
Yet other financial firms are remaining cautious. Regulatory and security risks are commonly cited as reasons bitcoin hasn't been adopted more broadly yet.
Fidelity already allows certain clients to view their crypto holdings next to their other accounts in their Fidelity portfolio. And its CEO, Abigail Johnson, is a noted proponent of bitcoin.
Aside from Walsh and Carter, Fidelity has lost a number of crypto employees in recent months.
Ben Pousty, formerly digital asset marketing lead for Fidelity Labs, left the firm in April to join crypto firm Circle, according to his LinkedIn profile. Kinjal Shah, formerly a senior consulting analyst, also left the firm to join Blockchain Capital, the crypto venture firm.
To be sure, Fidelity has made hires too. It recently brought on Tom Jessop, the former president of Chain and an ex-Goldman Sachs executive, as a head of corporate business development, for example.