Business – Fidelity, the conservative wealth management firm, shut down a crypto fund amid a slew of bitcoin staff departures

Fidelity
Chairman and CEO Abigail Johnson
Thomson Reuters

Fidelity Investments launched an internal crypto fund
last fall to invest the firm’s balance sheet in digital assets,
according to people familiar with the matter. 

The firm shut the fund, which was very small and
exploratory, this spring before
two
 employees involved in the project
left. 

Fidelity is also hiring employees to work on services
relating to cryptocurrency exchanges and crypto
custody. 

Fidelity, one of the biggest providers of 401(k) services and
other retirement products to Americans, in recent months shut
down an internal crypto fund it launched in 2017, according to
people familiar with the matter. 

The fund, which was small and exploratory, used capital from the
firm’s balance sheet to invest in crypto-related assets, the
people said. It was wound down in spring 2018 before two key
members of the project exited Fidelity.

Matt Walsh, a vice president at Fidelity, and Nic Carter, a
former investment research analyst at the firm, were both
involved with the project and left to start Castle Island
Ventures, a crypto-focused venture capital firm, the people said.
Walsh and Carter could not be reached for comment. A spokeswoman
for Fidelity declined to comment on the exits. Business Insider
is awaiting a response on the fund itself.

The project, which has not been previously reported on, shows the
extent to which Fidelity — by wagering its own capital —is diving
into the nascent market for digital currencies. 

The funds firm is
also looking or talent to build its own crypto exchange and
digital asset custody business, Business Insider
earlierreported.Such an offering could help legitimize
the burgeoning crypto market, market structure specialists
said. 

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Other established Wall Street players are also weighing their own
moves into crypto. Goldman Sachs has a team
dedicated to building out a trading
operation tied to crypto, and the New York
Stock Exchange is reportedly building a crypto trading platform.

Yet other financial firms are remaining cautious. Regulatory and
security risks are commonly cited as reasons bitcoin hasn’t been
adopted more broadly yet.

Fidelity already
allows certain clients to view their crypto holdings next to
their other accounts in their Fidelity
portfolio. And its CEO, Abigail Johnson,
is a
noted proponent of bitcoin.

Aside from Walsh and Carter, Fidelity has lost a number of crypto
employees in recent months.

Ben Pousty, formerly digital asset marketing lead for Fidelity
Labs, left the firm in April to join crypto firm
Circle, according to his
LinkedIn profile. Kinjal Shah, formerly a senior consulting
analyst, also left the firm to join Blockchain Capital, the
crypto venture firm.

To be sure, Fidelity has made hires too. It recently brought on
Tom Jessop, the former president of Chain and an ex-Goldman Sachs
executive, as a head of corporate business development, for
example. 

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