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 in its new digital asset business, as more institutional investors flocked to crypto.
Revenue increased to £758,950 in 2021, up from £39,856 in 2020. However, losses widened as it began hiring.
Globally, Fidelity Digital Assets plans to hire 110 technical workers, including engineers and developers with blockchain expertise, to build digital infrastructure to support services for cryptocurrencies beyond bitcoin.
Revenue will continue to rise in 2022, “with increasing business activity in custody and trading services” as new clients are on board, Fidelity said.
Separately, fintech startups are following Fidelity’s bitcoin retirement plan, with several offering crypto access to consumers, or planning to do so, mainly through individual retirement accounts.
Britain’s latest crypto hub
Proposals to rewrite UK property laws to account for crypto assets were warmly welcomed by the industry, with commentators saying they were likely to help with the government’s aim to make the UK a crypto hub.
The Law Commission, whose proposals are usually adopted by the government, said on July 29 that laws surrounding movable property should be amended to include a distinct 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 money lost in hacks or fraud through legal action, and equip courts with the ability to determine token ownership.
The change “should give the UK a competitive edge, certainly in terms of regulatory certainty,” 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 lengthy update on how it hopes to tackle risky investments including crypto.
But for a 205-page policy document, it contained little in the way of fact Policy about how it will regulate the industry – especially given that the proposals are all subject to changes in legislation further down the line.
The regulator wants investors to keep their holdings of crypto assets at 10% of their net worth by adding crypto to the medium-risk category, which also includes crowdfunding investments.
Ari Redbord, a former financial adviser to the US Treasury Department who is now head of legal and government affairs at blockchain intelligence firm TRM Labs, said the wording of the document came across as “an aggressive warning” rather than a restriction.
The move is likely designed to “enforce thoughtful consideration before taking the plunge into what the FCA considers risky investments,” he said
Meanwhile, Iskandar Vanblarcum, managing director of crypto exchange OKCoin’s European operations, was quick to push back at any suggestion that people’s crypto holdings should be limited.
“Instead of controlling the amount that people can invest, the priority for policymakers should be to set standards for businesses in the industry, particularly regarding transparency and handling of investors’ funds after they are deposited,” he said.
Over the pond
When it comes to the ongoing debate over whether crypto tokens should be listed as securities, Binance appears to be erring on the side of caution.
Binance.US, the US arm of the world’s largest crypto exchange, delisted the AMP token – a small cryptocurrency with a nominal market capitalization of less than $400 million. It comes in the wake of the Securities and Exchange Commission’s investigation into insider trading at rival Coinbase.
AMP is significant because it was one of nine tokens listed by the SEC as unregistered securities as part of its investigation into Coinbase.
Elsewhere in crypto
The growing crisis of confidence in Coinbase showed no signs of letting up, as high-profile American investor Cathie Wood dumped more than 1.4 million shares in the struggling crypto exchange via investment firm Ark Invest.
The Securities and Exchange Commission has charged 11 people with allegedly setting up a crypto pyramid scheme, which raised more than $300 million from millions of investors. The founders of the firm, called Forsage, most recently lived in Russia, Georgia and Indonesia, the SEC said.
And finally, the US Federal Reserve has written to Voyager Digital – a crypto broker that filed for bankruptcy – asking it 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 undergoing updates as we go through a voluntary restructuring process and work to restore service on our mobile and web platforms.”
To contact the author of this story with feedback or news, email Alex Daniel
