In a move that likely paves the way for more Canadian institutions to invest in cryptocurrencies, Fidelity Clearing Canada ULC has been approved by regulators to become the country’s first custodian for bitcoin.
On Wednesday, Fidelity was approved by the Investment Industry Regulatory Organization of Canada (IIROC) to launch a new digital asset service. The custody and trading platform is not for retail investors to access bitcoin directly but rather for institutional investors seeking exposure to the cryptocurrency, including pension funds, portfolio managers, mutual funds and exchange-traded funds.
Fidelity Clearing Canada provides services to more than 100 investment companies in Canada. Together with Fidelity Investments Canada ULC, they represent more than $222-billion in assets under administration and management as of June 30.
Earlier this week, Fidelity Investments Canada ULC also filed a preliminary prospectus with regulators to launch a bitcoin ETF and bitcoin mutual fund.
“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,” Scott Mackenzie, president of Fidelity Clearing Canada, said in an interview.
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If approved, the Fidelity funds would join the growing list of existing bitcoin funds already launched in the Canadian marketplace. Many of those funds are currently using U.S.-based custodians to hold their assets, including the country’s largest bitcoin ETF, launched by Toronto-based Purpose Investments earlier this year.
The launch of the new digital currency trading and custody platform comes eight months after the Canadian Securities Administrators and IIROC released guidance on cryptocurrency trading, prompting Fidelity to look into expanding into offering support to the Canadian investment community, Mr. Mackenzie said.
While stepping into cryptocurrencies is a first for Fidelity Canada, it is not for Fidelity Investments Inc. in the United States. In 2018, the Boston-based company launched Fidelity Digital Assets, a similar cryptocurrency business providing institutional investors custody and execution services for bitcoin. Mr. Mackenzie says the company’s U.S launch gave Fidelity Canada a four-year runway in being able to quickly set up services in the cryptocurrency market.
The platform will focus on bitcoin but could expand into other digital assets, including NFTs, or non-fungible tokens.
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Clare O’Hara