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The Fidelity approval as the inaugural Bitcoin custodian in Canada seemingly paves the way for more Canadian acts to follow.
Fidelity Clearing Canada ULC (FCC) is the first regulated institution in Canada to become a Bitcoin custodian. FCC secured the approval on Wednesday from the Investment Industry Regulatory Organization of Canada (IIROC). This means that the financial powerhouse will start offering trading services to institutional investors, allowing them to buy, sell and hold the crypto. Fidelity Clearing Canada president Scott Mackenzie issued a statement on Wednesday, part of which read:
“The demand for investing in digital assets is growing considerably and institutional investors have been looking for a regulated dealer platform to access this asset class. Fidelity Clearing Canada is pleased to offer our new solution, leveraging Fidelity’s global expertise and deep knowledge of digital assets for leading Canadian institutional investors.”
What Fidelity Being Canada’s First Bitcoin Custodian Means
The custody and trading platform to be provided by FCC does not provide direct access to BTC for retail investors. Instead, it provides an avenue for institutional investors who want some exposure to the digital asset. Many of these institutional investors operating in Canada currently use the services of custodians based in the United States. Such institutional players include portfolio managers, pension funds, exchange-traded funds, and mutual funds. Also, as hinted in Mackenzie’s statement, the Bitcoin custody approval would likely pave the way for other Canadian institutions to invest in crypto.
FCC currently caters to more than 100 investment companies in Canada. In addition, the firm has more than 209 billion Canadian dollars ($166 billion) in assets under management. In conjunction with Fidelity Investments Canada ULC, the total AUM figure is $222 billion as of June 30th, 2021.
Earlier in the week, Fidelity Investments Canada ULC filed a preliminary prospectus with regulators for a bitcoin ETF and bitcoin mutual fund. Respectively named the Fidelity Advantage Bitcoin ETF and Fidelity Advantage Bitcoin ETF Fund, the former will leverage FCC’s custodian services.
According to Mackenzie, this could not have come at a better time. This is because the firm already operates one in the US and provides a “four-year runway” for its Canadian counterpart. The latter can benefit immensely, especially in the processes that lead up to setting a Bitcoin fund in the crypto marketplace.
Fidelity Investments Inc. initially launched a crypto service, called Fidelity Digital Assets and based in the US, back in 2018. In that time, US institutional investors have been enjoying BTC custody and trade execution services. In May this year, the US Bitcoin fund, accessible only to accredited investors, raised about $102 million from affluent investors.
Fidelity Seems to Have a Lot Riding on Digital Currencies
Fidelity seems considerably bullish on crypto and its longevity. This bullishness might be based on crypto’s penetration of the mainstream institutional finance space. Consequently, the firm is carving out more of a crypto role and ‘aligning’ itself with digital currency offerings.