Good day everybody,
Welcome to CryptoGod-1's blog on all things crypto. In this post I will be looking at the announcement from Fidelity that their Crypto Custody Business has seen a 60% decline in revenue, leading to losses of £7 million.
Fidelity’s Crypto Custody Business
Fidelity Digital Assets, the cryptocurrency custody arm of Fidelity Investments, revealed they have seen a drop in revenue of nearly 60% along with losses of £7.1 million for the year 2023. A recent report from the Financial News, citing documents filed by Fidelity with Companies House, noted that the company generated £545,000 in revenue during the 12-month period ending in December 2023, which was a notable decrease from £1.34 million in the preceding year.
Launched back in 2018 in a bid to expand its crypto services, Fidelity also noted operating expenses soared by 32% on a year-on-year basis to £7.8 million in 2023. This was mainly due to onboarding new staff and a rise in staff salaries and benefits from £1.6m to £3.2m, with their loses increasing by almost £5 million from £2.5m in 2022.
Fidelity Digital Assets attributed the revenue decrease across its UK arm to a drop in so-called service-level agreement fees and foreign exchange fluctuations. However, despite the financial challenges for its United Kingdom arm of the company, they remain optimistic about future prospects. The plan is for Fidelity Digital Assets to continue expanding its product and service offerings in the digital asset space. They noted:
"The company continues to expand its digital asset product and service offerings. Revenue is forecasted to grow upwards with increasing business activity in[…] custody and trading services, as additional new clients are expected to be onboarded.”
Back in early 2023 Fidelity lost its crypto chief Chris Tyrer who had been in charge of the companies crypto efforts since back in 2019 as head of Europe. In late May of this year Tyrer joined Bullish, a crypto exchange backed by Peter Thiel, as head of strategy. Fidelity remains positive and expects to onboard additional new clients, along with the global crypto custody industry becoming more competitive as established traditional finance names enter the market.
Standard Chartered owns London-based crypto custodian Zodia Markets while a Japanese bank, Nomura, entered the crypto custody space in 2018 with the launch of Komainu. In October 2022 BNY Mellon introduced its crypto custody platform in the US while Deutsche Bank partnered with Swiss crypto startup Taurus to offer crypto custody services back in September of 2023. The world’s largest custody bank, State Street, also has a digital assets division.
Several European asset managers have also made a move into crypto-focused businesses as they aim to increase their exposure to digital assets. Abrdn, the Edinburgh-headquartered fund group, made an announcement last year that they had acquired a stake in London-based digital securities exchange Archax. Schroders also obtained a minority stake in Forteus, a firm focused on blockchain and digital assets, back in 2022. Asset managers including VanEck, Invesco, Fidelity International and DWS have rolled out crypto ETPs for European clients.
Have a great day.
Peace. CryptoGod-1.
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