Fidelity Digital says it will allow institutional customers to pledge bitcoin as collateral against cash loans in partnership with Blockfi. The firm’s decision helps bitcoin investors turn their digital holdings into cash without selling. Fidelity’s targeted clients include hedge funds, crypto miners, and over-the-counter trading desks.
According to a report that quotes Tom Jessop, the president of Fidelity Digital Assets, the firm is also envisioning “the loans to be longer-term than a typical repo trade.” Jessop adds:
We want to develop a world-class brokerage capability for assets of all types.
The decision by Fidelity’s digital assets division to accept bitcoin as collateral comes as the firm continues to report rising institutional interest in digital currencies. An earlier survey conducted by the firm found that 36% of the respondents held crypto in their portfolios. Additionally, about 60% expressed interest in bitcoin and other cryptocurrencies compared to 47% that had similar sentiment in 2019.
Still, the report clarifies that in order to benefit from the loan service, “a Fidelity customer will have to have an account with Blockfi.”
In the meantime, Blockfi CEO Zac Prince says his company “will risk-manage the famous volatility of bitcoin by offering cash worth 60% of a loan backed by the digital asset.” Still, he adds the program has room for “client-level customization and may be adjusted to meet the needs of large firms.”
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