Fidelity Increases Its Stake in the First Hong Kong Regulated Crypto Exchange, OSL

Fidelity Investments, a leading global asset manager interested in crypto, has increased its capital allocation to BC Technology Group. This firm runs the first crypto asset exchange to be licensed in Hong Kong, OSL. According to the regulatory filing, Fidelity increased its ownership stake from 5.29% to 6.29% after acquiring an additional 3.3 million shares at HK$52.3 million ($6.7 million).

Before this event, Fidelity’s shares at BC Technology stood at 17,795,500, an investment that the asset manager acquired last year at a rough figure of $14 million. The latest increment is a sign of the bullish outlook in being exposed to Hong Kong crypto markets where regulators seem to have been slowing capital inflows. Notably, BC Technology raised around $90 million in a top-up share placement last week.

Having received the Hong Kong license, OSL crypto exchange might be well onto the path of exponential growth. This much-coveted license is issued by the Hong Kong Securities and Futures Commission, which means that OSL now gives crypto exposure to both retail and institutions. The exchange recently touted its status as the world’s ‘first SFC-licensed, listed, digital asset wallet-insured, Big-4 audited digital asset trading platform for institutions and professional investors.’

Going by such fundaments, Fidelity’s capital scaling in Asia comes as no surprise; in fact, the firm recently invested in a Singapore regulated fund manager dubbed Stack Funds in a move that will enable investors to purchase and store crypto assets. Fidelity also launched a Europe based unit towards the end of last year; this particular entity was launched in the United Kingdom and will focus on extending Fidelity’s services to the larger European market.

Overall, Fidelity has had quite a good run in the crypto space; its CEO, Abigail Johnson, a crypto enthusiast, recently revealed that their custody operations have been ‘incredibly successful.’ Having launched its Bitcoin fund in early 2020, Fidelity targets investors who can invest a minimum of $100,000. Per the company’s latest updates, an estimated 36% of institutional investors have exposure to BTC or other crypto assets.

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Author: Edwin Munyui

Fidelity-backed OSL Becomes World’s First SFC-Licensed & Insured Crypto Exchange

Fidelity owned BC Technology’s OSL Digital Securities has finally obtained the Securities and Exchange Commission’s license to become the world’s first SFC-licensed, listed, digital asset wallet-insured, Big-4 audited digital asset trading platform for institutions and professional investors.

One of Asia’s most prominent digital asset platforms for investors, OSL is now licensed to conduct Type 1 (dealing in securities) and Type 7 (automated trading service (ATS)) regulated activities.

Besides the Hong Kong licenses, OSL has also applied to the Monetary Authority of Singapore for a digital asset license under the Payment Services Act.

OSL can now legally operate regulated brokerage and automated trading services for digital assets. Once it goes live, which is to be announced in the coming weeks, OSL will offer trading access to Bitcoin, Ethereum, and other cryptos along with selected security token offerings (STOs). OSL CEO Wayne Trench said,

“Institutional investment in Bitcoin and other digital assets has rapidly accelerated over the past several years, and has entered a new era of growth in Hong Kong with licensing.”

“Institutions, and other professional investors, including HNWIs and family offices, can now trade digital assets with the region’s most comprehensive and trusted digital asset platform in OSL.”

The company already opted into SFC’s virtual asset regime, and now it has completed its rigorous vetting program.

According to the official announcement, the same heightened level of regulations has applied to digital assets that govern the securities markets so clients can trade with confidence under the safeguards they are accustomed to.

OSL customers will have to undergo “rigorous” KYC and AML measures while benefitted from the additional insurance protection on digital assets. OSL Head of Distribution and Prime Matt Long noted,

“Licensed entities are the future of digital assets and capital markets in the digital age, and professional investors, hedge funds, and family offices are now rapidly increasing portfolio allocations to digital assets such as Bitcoin.”

The digital platform had “exceptional” growth in 2019 and the first half of 2020 with a year-on-year revenue increase of 47%, driven by annualized trading volumes of $28 billion in the first six months of the year.

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Author: AnTy

Fidelity Digital to Custody BTC as Collateral for BlockFi’s USD Loans to Institutions

Fidelity Digital Assets will now allow its institutional customers to use their Bitcoin as collateral against cash loans.

This new offering has been introduced in partnership with blockchain startup BlockFi, which announced on Wednesday that it is “thrilled” to support “Fidelity’s entrance into the digital asset financing space.”

“Having an ability to finance positions is a critical component of financial services infrastructure, and this collaboration reflects an exciting development for the digital asset ecosystem,” said Zac Prince, CEO and founder of BlockFi.

BlockFi will be offering US dollar loans to institutional clients holding BTC as collateral in custody accounts at Fidelity Digital Assets (FDA), the unit of Boston-based asset manager Fidelity Investments. Christine Sandler, Head of Sales and Marketing for FDA said,

“We continue to see demand for increased capital efficiency from institutions that maintain long bitcoin positions, and with this collateral agent capability, our customers seeking that efficiency can access more opportunity with the capital that they trust us to keep safe.”

Cash will be offered worth 60% of loans backed by the digital asset with “room for client-level customization” and even adjusted to meet large firms’ needs, said Prince.

Combining risk-managed loan agreement with custody furthers the opportunity for institutions in the digital asset space. Sandler said,

“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.”

With this new offering, FDA is entering into the “thriving lending market” of digital assets that target those Bitcoin investors who want to turn their cryptocurrency into cash without selling.

Hedge funds, crypto miners, and over-the-counter trading desks are the potential customers, Tom Jessop, president of FDA, said in an interview with Bloomberg. He sees the loans to be longer-term than the typical repo trade.

According to him, holding BTC to back loans is “a foundational capability,” and “as the markets grow, we’d expect that this becomes a fairly important part of the ecosystem.”

Right now, BlockFi offers 8.6% APY for users that HOLD BTC on their platform.

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Author: AnTy

Fidelity Digital Assets Addresses Common Criticisms And Misconceptions On Bitcoin (BTC)

  • Fidelity Digital Assets responds to common criticisms and misconceptions about BTC.
  • “Bitcoin chose scarcity and decentralization over its payment features.”
  • The top cryptocurrency will not be replaced easily.

Cryptocurrency critics calling out about the market being in a bubble and oncoming failure for most of these tokens. As the top cryptocurrency, Bitcoin (BTC) has faced multiple criticisms, including its high volatility, environmental concerns, failure as a means of payment, and use in illicit activities. Fidelity Digital Assets, a subsidiary of Fidelity Investments, released responses on six of BTC’s common misconceptions and criticisms.

First, Bitcoin has been criticized as a store of value due to its volatility. The report, compiled by Fidelity’s Director of Research, Ria Bhutoria, however, states Bitcoin’s volatility “is a trade-off it makes for perfect supply inelasticity and an intervention-free market.”

As BTC gets to the mainstream economy, Ria believes the volatility will continue to slow down, as seen in previous years. Moreover, day-to-day volatility is expected to go down with “increasing spot and derivative market liquidity and the development of products that allow investors to express interest” in the cryptocurrency.

The argument about Bitcoin failing in its role as a payment system is also disputed in the blog post. The author argues that the blockchain makes a deliberate trade-off to offer users decentralization and settlement immutability. According to Bhutoria, Bitcoin offers a more efficient payment system in some instances, such as international payments. In contrast, incumbent digital payment systems such as VISA, MasterCard are more suitable for day-to-day payments. The statement reads,

“Given its high settlement assurances, Bitcoin optimizes its limited capacity for settling transactions that aren’t well-served by traditional rails.”

The post also responded to the argument that Bitcoin mining wastes energy, making it environmentally unfriendly. Bhutoria argues that Bitcoin mining “is powered by renewable energy or energy that would otherwise be wasted.” While it is undeniable that Bitcoin uses vast amounts of energy, the post states that the crypto benefits make the energy consumed “a valid and important use of resources.”

The biggest criticisms from regulators, authorities, and governments have been that Bitcoin is used in enhancing illicit activities (when in reality it should be compared to corrupt banks). Cases such as the Silk Road saga has further escalated the narrative that BTC pushes further illicit activities. However, the post responds to these criticisms stating,

“Bitcoin, like cash or the internet, is neutral and has properties that may be valuable to good actors and bad actors.”

Additionally, the share of Bitcoins used in illicit activities compared to the non-illicit trades is very small.

The post also targets BTC’s comments being replaced by a competitor in the future and crushing qualms on criticisms on the coin being backed by nothing.

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Author: Lujan Odera

Fidelity On A Hiring Spree to ‘Capitalize On Increased Market Demand’ For Digital Assets

Amidst the ongoing market frenzy, Fidelity Digital Assets is looking to hire more than twenty engineers to help them expand its capabilities and “capitalize on increased market demand,” basically to build the “future of finance.”

One of the largest asset managers in the world with $3.3 trillion in assets under management, Fidelity investments first started researching digital assets and blockchain in 2014, and then in 2018, they launched Fidelity Digital Assets. FDA was the companies,

“First step towards a long‐term vision to create a full‐service platform for storing, trading, and supporting digital assets.”

In the past two years, the digital assets market has grown “exponentially,” with more institutions adopting them as part of their portfolios.

So, in this changing landscape, Fidelity wants to improve its bitcoin custody and build new products to support the growing ecosystem. Peter Farland, Chief Technology Officer at Fidelity Digital Assets, said,

“Ultimately, we imagine a future where all types of assets are issued natively on blockchains or represented in a tokenized format.”

The company is hiring engineers with development experience with Bitcoin, Ethereum, and other digital assets for Merrimack, NH, and Boston, MA locations in the US.

The idea is to create secure, interoperable, and scalable products to offer safe and simple investment in Bitcoin and increase digital assets’ overall adoption.

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Author: AnTy

Fidelity Head Launches New Bitcoin Index Fund; $100,000 Minimum Buy-In Price

One of the largest mutual funds in the U.S., Fidelity Investments, is enhancing its efforts in the Bitcoin and crypto space with its chief strategist, Peter Jubber, starting an institutional-grade and high net worth clients-focused BTC index.

According to a filing sent to the Securities Exchange Commission (SEC), Fidelity Investments has launched a new Bitcoin index fund, ‘Wise Origin Bitcoin Index Fund I, LP’ that targets high et worth investors and institutions. A $100,000 minimum buy-in value is required by the index fund following the demand by corporations and accredited investors on Wall Street on crypto investments.

The Wise Origin Bitcoin fund was launched by the head of strategy and planning at Fidelity Investments, Peter Jubber, in conjunction with the mutual fund’s brokerage and distribution divisions. The fund aims to provide a gateway for accredited investors on Wall Street to dip their feet into crypto.

Fidelity is known for its soft stance on crypto investing, owning stakes in crypto companies such as Canadian mining firm, 8Hut, and providing custodial services to institutions. Jubber, also a well-known enthusiast and evangelist of Bitcoin and blockchain, in 2017 said the firm was sketching out a decade long plan on the impacts and opportunities that blockchain technology offers to traditional finance.

Peter will lead the ‘Wise Origin Bitcoin Index Fund’ as the executive director and FD’s Fund’s president. Reports on Forbes also confirm that a Delaware based firm, FD Funds GP will become a general partner to Fidelity’s new BTC fund.

Fidelity’s reports on the cryptocurrency market this June showed that over 36% of big institutional investors were taking up digital assets, and another 80% of them stating they find crypto appealing. Moreover, a recent report by the mutual fund concluded there is an increasing interest in Bitcoin as a store of value with the world’s witnessing unprecedented fiscal and monetary policies.

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Author: Lujan Odera

AMR Filling Reveals Fidelity Investments Owns 10.6% Stake In Canadian Bitcoin Miner, Hut8

Fidelity, a digital asset management firm, holds over 10% of the recently-listed Canadian firms, Hut8, according to reports from TheBlock. The former’s, which is also invests in Bitcoin mining, investment in Hut8, aims at increasing its hash rate with the purchase of new MicroBT and Whatsminer mining equipment.

In an official filing by Hut8 – an alternative monthly reporting (AMR) – to Canadian top securities authority, Ontario Securities Commission (OSC), on Friday, disclosing Fidelity Investments holds 10.6% of shares in the company in a mix of common shares and common share purchase warrants. AMR is filed by Canadian companies to disclose their institutional investment partners.

Welcoming a new investor in the company through an underwritten public offering on June 25 forced the filing of the AMR. The total offering is 5,750,456 units, with each unit representing one common share and one common share purchase warrant. Each Hut8 unit in the round costs $1.45, bringing the total raised in the firm to $8.34 million.

The statement released on Fidelity Investments purchase reads:

“Fidelity holds 8,396,138 Common Shares and 2,054,956 common share purchase warrants, as a result of which Fidelity deemed to hold 10,451,094 Common Shares representing approximately 10.58% of the outstanding shares of that class.”

This raise is aiming to better Fidelity’s Bitcoin mining hash rates with part of the investment set to purchase new mining equipment, including MicroBT’s, Whatsminer M30S, M31S, and M31S+.

Fidelity Investments in Bitcoin

The latest partnership is significant to Fidelity as it aims to expand its cryptocurrency operations. The asset management company, which holds over seven trillion in AUM, opened a new entity in London at the tail end of 2019 to help institutions onboard Bitcoin as assets.

Notwithstanding, in January this year, the company released a job listing looking for a Bitcoin mining engineer in a bid to boost operations.

On the other hand, Hut8 is struggling to make profits since launch as the Canadian mining firm witnessed a third successive drop in revenues at the end of Q2 2020.

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Author: Lujan Odera

TradeStation Crypto Connects to ErisX To Boost Trading Liquidity; Joined Fidelity Last Week

A week after securing a similar partnership with Fidelity Digital Assets, TradeStation Crypto adds ErisX to expand its connectivity and liquidity to its platform.

On the 15th of April 2020, TradeStation Crypto, the Crypto arm of the popular TradeStation platform, announced that customers now have access to quotes and liquidity from ErisX’s spot markets for digital assets.

These supported assets include Bitcoin Cash (BCH), Bitcoin (BTC), Ethereum (ETH) and Litecoin (LTC). TradeStation is plugging into ErisX in order to enhance better price clarity, heavier liquidity and streamlined access to the crypto markets.

James Putra, the Director Product Strategy at TradeStation Crypto, recently stated that this new alliance was a key step towards achieving their end goal.

Further adding that its main goal was to deliver a liquidity pool in the crypto market. With the help of TradeStation Crypto’s new partnership with ErisX, the two companies will work hand-in-hand to provide mainstream access to all the crypto markets. This is also an attempt to mature the general market structure.

ErisX offers individuals an innovative platform to access digital asset spot and future markets.

Using just a single account, TradeStation Crypto has also opened a gateway to crypto markets which allow the trading of cryptocurrencies on several different markets including the exchange itself.

Through the use of the TradeStation platform as a go-between, customers will now be able to execute trades on these markets. Customers will also be able to access ErisX for spot market trading.

Thomas Chippas, the CEO of ErisX, said recently that the new collaboration was mainly aimed at simplifying access to the crypto markets, overall. Adding that it was also to ensure investors could add these digital assets to their broader portfolio.

For traders who crave a seamless and dependable trading experience for their digital assets: TradeStation is proving itself as the way to go. Just like with Fidelity Digital Assets, customers on TradeStation Crypto will also be able to access the ErisX crypto spot market.

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Author: Lujan Odera

Fidelity Digital Assets Onboards First Crypto Exchange, ErisX to Increase Trading Liquidity

ErisX clearinghouse now has a new member, Fidelity Digital Asset, (FDA) has joined ExisX in order to offer better buy and sell liquidity by taking advantage of its own central limit order book.

The announcement of Fidelity’s new venture was made on Thursday, and stated that the ErisX spot market will be available for all FDA customers. ErisX is the first crypto exchange to be onboarded by FDA. Terrence Dempsey, head of product at FDA believes, that ErisX was so attractive to his company because they are regulatory compliant and have the right counterparty risk analysis tools. He said,

“We have an execution platform that is connected to our custody offering that offers two things,” he said. “One [is] a matching engine, so we’ll look to cross client trades and if we can’t … we go out to a network of venues, or liquidity providers as we call them, that we can actually go and execute with.”

ErisX Validates FDA’s Work

The CEO of ErisX, Thomas Chippas, said of the new partnership:

“[…] a great validation of what we’ve been working on for so long, which is to get these sorts of household institutional intermediary names into our market.”

Crypto enthusiasts already know that one of ErisX’s goals is to make more traditional intermediaries come into the crypto world, and FDA has invested efforts in doing all this by offering execution and custody services for quite a while now. Thursday’s announcement indicates the already long lasting relationship between the 2 companies will further be solidified. Fidelity Digital Asset was one of the initial investors in ErisX back in 2018.

What Benefits Will the Deal Bring?

The central limit order book is a great benefit as it’s made available to all clearinghouse participants so they can access the same pool of liquidity. While OTC desks are tapping a price when having to connect buyers and sellers in order to increase their own profits, the ErisX system doesn’t do this. Dempsey said FDA worked in the past with OTC desks, but decided that identifying the liquidity pool to which the crypto custodian of the asset manager has access is what’s truly helpful. In other words, ErisX provides access to its spot exchange and order book, with the user experience and interface are being handled by FDA.

ErisX to Continue Adding Clearinghouse Members

As Chippas said, ErisX is planning to add more clearinghouse members. He didn’t specify how many members there are at the moment but mentioned they’re both institutional and retail clients. Names like TradeStation and TD Ameritrade were noted. He added that the new partnership with the FDA won’t raise any concerns for the long-term relationship ErisX has with TD Ameritrade. He added,

“The fact that Fidelity’s customer trades will now occur on a regulated and surveilled order book should build confidence for other entities.”

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Author: Oana Ularu

Fidelity International Buys 5.6% Stake In A Hong Kong Based OSL Crypto Exchange Operator

Fidelity International, an off-shoot of renowned US-based financial asset manager Fidelity Investments, has decided to purchase a 5.6% stake in crypto exchange OSL that operates in Hong Kong.

According to public disclosure documents, Fidelity international purchased 17 million shares from BC Group which owns OSL crypto exchange. According to the deal, each share was valued at HK$6.50 (US$0.83) which translates to $14 million worth of investment which is 5.6% stake in the crypto firm.

According to CoinDesk, the current investment is one of the $36 million share placement which BC Group revealed last month. The firm which listed on the Hong Kong Stock Exchange revealed that the transactions were finished on Feb. 12, however the investors’ names were not revealed until today.

The round also attracted major global investors such as Eternity Investment Limited which is based in Hong Kong that mostly deals with jewelry products.

According to BC Group CFO, Steve Zhang, the current placement by global renowned investors is evidence that the digital asset industry is becoming of age. He added that this only confirms what the majority of crypto enthusiasts believe that mass adoption of crypto and digital assets is inevitable. He also explained that global financial companies are rapidly investing in firms which have developed institutional quality infrastructure and are compliant with the set regulatory standards.

OSL is one of the biggest cryptocurrencies exchanges within Asia which focuses on both institutional as well as individual investors offering services like trading, custody and brokerage. Recently, the firm applied for Hong Kong Securities and Futures Commission licence as per digital asset framework category.

Hugh Madden, BC Group’s CEO, expressed his gratitude that equity investors that are world-class are rapidly taking part in the ever-growing virtual asset sector. He added that the firm is optimistic of reaching new heights after the coming on-board of leading institutional investors.

From its disclosures, Fidelity International claims that it is managing customer assets valued at $418.8 billion with its clientele coming from all over the world.

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Author: Joseph Kibe