Wall Street

Fidelity, Gemini announcements bring cryptocurrency investments closer to the mainstream

Fidelity will begin securing Bitcoin wallets while Gemini passed a tough examination of its security services by Deloitte

Cryptocurrency supporters eager to see the business break into the financial mainstream had a pair of good signs on Jan. 30, as Fidelity Investments announced a timeframe for its Bitcoin custody service, and the Gemini exchange became the first exchange to pass a tough third-party test of its security offerings.

Bloomberg reported that Fidelity plans to offer its services, including private key management, compliance, and defense against hackers beginning in March. It comes as a two-week-long (and counting) hack of New Zealand-based cryptocurrency exchange Cryptopia has frayed nerves while making more than $16 million worth of Ethereum (ETH) disappear, according to blockchain data provider Elementus. Fidelity plans to expand its digital custody service to Ethereum in the near future.

Fidelity is targeting large clients like hedge funds and trading firms with Fidelity Digital Assets, first announced in October. Safe storage will be the first service offered, followed by trading services down the line.

Meanwhile, Tyler and Cameron Winklevoss’ Gemini Trust Company announced on Jan. 30 that it had passed an important and very difficult examination of the design and implementation of its security services by Big Four accounting and professional services firm Deloitte.

Passing the prestigious SOC 2 – SOC for Service Organizations Type 1 examination “across both our exchange and custody platform raises the bar for security and compliance standards of the crypto industry and is what retail and institutional consumers should require of any cryptocurrency exchange and custodian they do business with,” said Yusuf Hussain, Gemini’s head of risk, in a statement. The exam’s standards are set by the American Institute of CPAs.

While Gemini has not yet been able to win Security & Exchange Commission approval of its long-sought cryptocurrency exchange-traded fund, in October the digital asset exchange secured approval to offer FDIC insurance for dollar-denominated funds in its hot wallets. And in September, it won approval of its Gemini Dollar stablecoin from the famously strict New York Department of Financial Services, which also oversees the broader Gemini Trust.

Through their firm Winklevoss Capital Management, the Winklevoss twins in March 2018 proposed and have strongly supported the Virtual Commodity Association, a cryptocurrency self-regulatory organization.

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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.