How might Bakkt and Fidelity impact cryptocurrency as we know it?

In Insights

There’s a lot of buzz right now about Bakkt and Fidelity, but what really are they and what are they going to do?

These two financial behemoths are preparing to enter crypto and it could have a positive impact on the crypto sector as a whole.

At Liquid, our steadfast approach to regulation, security and customer satisfaction positions us in a great spot to welcome this forthcoming wave of activity as we set our sights firmly on the future of democratizing finance.

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Read on to find out more about what could be in store for crypto this year.

What are Bakkt and Fidelity?

Bakkt is a digital asset infrastructure platform that will facilitate futures trading, provide custody solutions and utilize the potential of digital assets for payments.

Fidelity is a financial investment company that is going to launch a cryptocurrency execution and custody service.

First impressions: so what?

Let’s dig deeper. These two cryptocurrency ventures could change the game.

The power behind Bakkt

Bakkt is created and owned by Intercontinental Exchange (ICE), owners of a number of major exchanges, including the New York Stock Exchange (NYSE).

Bakkt is coming into the cryptocurrency game with major backing. ICE have heaps of experience from owning traditional exchanges.

The Fidelity force

Fidelity Investments is going to be launching a new company arm known as Fidelity Digital Asset Services (FDAS). Much like ICE, Fidelity is coming from the traditional finance and investment world with experience, reputation and a huge clientele. For context, Fidelity controls around 7 trillion USD worth of customer assets.

FDAS will handle execution and custody services of digital assets, like Bitcoin and Ethereum, for clients. This is a different service to Bakkt, as FDAS will facilitate digital asset trade execution and manage custody on behalf of clients, while Bakkt is a trading platform.

Fresh interest, big money

FDAS and Bakkt are backed by two hugely successful, traditional financial companies. Despite their different approaches, they have a number of commonalities that should fuel growth in the cryptocurrency markets.

Both FDAS and Bakkt should help drum up interest based on their parent companies’ reputation.

Neither of these services is targeting retail investors. They will cater to professional traders, hedge funds and institutional investors. They wouldn’t be launching without certainty that the interest for their services is there.

Institutional investors and hedge funds enter markets for profit, conveying confidence in the future of the crypto market. This is a bullish sign, particularly as we appear to be near the end of a bear market.

Investors using FDAS will be able to invest in cryptocurrency without having to hold it. The firm will manage this for them – customers will not need to deal with wallets and addresses. This will drive investment interest. Nevertheless, the importance of understanding how to stay safe in crypto remains.

Similarly, Bakkt will offer futures trading, so traders can speculate on the prices of digital assets without having to touch the underlying asset.

Development of the crypto sector

The more digital asset companies collaborate with regulators, the better. Regulatory clarity will grow.

These financial giants are entering and raising the bar. Crypto exchanges will have to keep up to stay in the game. This holds especially true in terms of security and usability.

Our emphasis on security at Liquid should begin to resonate louder. Bringing the custody solution and cyber security standards that the NYSE uses into the cryptocurrency space is a big deal.

Cryptocurrency prices have been impacted by exchange hacks and issues in the past. Large financial firms wouldn’t expose themselves to this kind of risk. A lack of adequate institutional tailored investment firms has prevented this money entering the crypto markets, until now. This is also why we have such a focus on security at Liquid.

The entrance of FDAS and Bakkt once again highlights the importance of security. It should be a wakeup call for many of today's exchanges, which in the long term will strengthen our landscape.

If consumers are able to easily use their crypto as payment, mainstream interest will rise. That’s what Bakkt is aiming for with their payment services and partnerships with the likes of Microsoft and Starbucks. 

 

Other financial hubs take interest

FDAS and Bakkt are the two new products, but they are certainly not the only existing financial players that are stepping into the game.

Galaxy Digital is another example of a financial platform aiming to provide the bridge institutional investors need to properly enter this space. Services include asset management, trading and advisory.

What does it all mean?

Interest is increasing. Standards are rising. Regulators are actively working with cryptocurrency firms. New, big money is moving in.

All in all, it feels bullish.

But you don't need to wait for Bakkt and Fidelity to make your own move into crypto. At Liquid, we're here ready to welcome you.

Trade Crypto

This content is not financial advice and should not form the basis of any financial investment decisions nor be seen as a recommendation to buy or sell any good or product. Trading cryptocurrency is complex and comes with a high risk of losing money, particularly if you trade on leverage. You should carefully consider whether trading cryptocurrencies is right for you and take the time to learn how trading works and decide how much money you are prepared to lose.

WRITTEN BY

Liquid

Providing liquidity for the crypto economy.