Fidelity BlockFi partner custody

Fidelity Digital Assets, BlockFi partner on DeFi lending custody

The decentralized finance lending platform’s institutional clients can now pledge bitcoins in Fidelity’s vaults as loan collateral

Fidelity Digital Assets has expanded its offerings in the cryptocurrency custody market, entering the digital asset financing space.

With substantial experience in providing custody services, the firm announced on Dec. 9 that it now offers services as a collateral agent, offering institutional clients the ability to pledge their bitcoins as collateral in transactions.

In addition, the company has formed a partnership with BlockFi, which will allow institutional clients of the decentralized finance (DeFi) lending platform to keep bitcoin pledged as loan collateral on BlockFi in Fidelity’s custody.

“We continue to see demand for increased capital efficiency from institutions that maintain long bitcoin positions,” said Christine Sandler, head of sales and marketing for Fidelity Digital Assets. “[W]ith this collateral agent capability, our customers seeking that efficiency can access more opportunity with the capital that they trust us to keep safe.” She added: 

“For Fidelity Digital Assets, this is an exciting first step into supporting the thriving lending market for digital assets and deepens our relationships within the digital assets ecosystem with leading firms like BlockFi which allows us to provide even more institutional-grade solutions to investors in this space.”

It is also a way for Fidelity Digital Assets to attract more institutional clients into the digital asset market, the firm said. 

According to Fidelity research, institutional interest in digital assets is growing fast, with 36% having already invested in the asset class, and 60% saying digital assets have a place in their portfolio. 

“The business and market momentum we’ve seen this year have reinforced our belief that institutional investors are looking for a more comprehensive offering in the digital assets space,” said Sandler. 

BlockFi founder and CEO Zac Prince said collaborating with Fidelity Digital Assets’ “robust digital asset management platform,”  is critical to financial services infrastructure. “[T]his collaboration reflects an exciting development for the digital asset ecosystem,” he said.

On Dec. 1, BlockFi partnered with Visa and Evolve Bank & Trust to launch a rewards credit card that pays its spending rewards in Bitcoin. And in August, it raised $50 million in a series C funding round led by Morgan Creek Digital.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.