Fidelity's big move | Tether becomes untethered?

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“While there are many places for consumers to buy and trade crypto, we didn’t see analogous developments for institutions. We made a decision to move in this direction, and that has been validated by the prospects we are talking to now.” Tom Jessop, head of corporate business development for Fidelity

The Big Block

Fidelity, the $2.5 trillion asset manager, is diving into the world of crypto with a brand new digital assets business.

The financial-services firm, which is known for its retail-brokerage and 401(k) offerings, announced Monday its cryptocurrency custody and brokerage solutions for institutions. The new services will be offered through a new entity, Fidelity Digital Assets, Tom Jessop, head of corporate business development, told The Block in an interview. While the initial custody solutions will be for bitcoin and ether, the firm also plans to custody other digital assets down the road. As for the trading side of the business, the firm will provide so-called white-glove services to asset managers to help them enter the market. Fidelity will act as a broker for those clients, routing orders to OTC desks where the firm can find the best price for clients.

Speaking to The Block in an interview, Jessop said the firm was excited to announce the new products given the increasing level of demand in the market. The products have been in the works for many months. 

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Around The Block

Is a Tether bank run underway?

Folks are identifying a bank run on Tether is underway as price is nearing $0.92 on Kraken after trading for less than $0.99 for a week. If the situation continues to degrade, the collapse of the so-called stablecoin could follow, industry insiders say. And the risk that poses to the value of other cryptocurrencies, a concern expressed about Tether for some time, could come to fruition. Tether plays an important role in the cryptocurrency ecosystem: it records about 98% of all the stablecoin volumes and accounts for approximately 92% of all stablecoins in circulation.

Tether was created on a simple premise of issuing tokens that will always be redeemable for U.S. dollars. The company, affiliated with Bitfinex, promises to hold the corresponding reserves in bank accounts subject to frequent professional audits. In January, Tether dissolved its relationship with audit firm Friedman LLP and in July, Tether released a report by a law firm Freeh, Sporkin & Sullivan LLP attesting to USD reserves held on just a single day. Tether’s general counsel told Bloomberg: “The bottom line is an audit cannot be obtained. The big four firms are anathema to that level of risk.” — More

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