Fidelity, in partnership with BlockFi, begins issuing loans collateralised by Bitcoin

Fidelity Investments’ digital assets division will enable institutional clients to use bitcoins as collateral for cash loans. Bloomberg reports

Fidelity Digital Assets president Tom Jessop clarified that his firm will hold the digital asset rather than extend loans. He said the service could potentially appeal to hedge funds, miners and OTC platforms.

“Loans will be longer-term than typical repo transactions. As markets grow, we expect this to become a fairly important part of the ecosystem,” noted Jessop.

BlockFi will be the company’s partner. To obtain a loan, a Fidelity client must have an account with BlockFi.

BlockFi CEO Zac Prince said the startup will manage volatility risk by offering 60% loan‑to‑value secured by Bitcoin.

“However, there is room for client-level customization in the program, and it can be tailored to meet the needs of large firms,” he added.

Back in October 2019, Fidelity Investments launched a custody service for institutional Bitcoin investors.

In November 2020, Fidelity Investments’ digital assets division’s chief analyst Ria Bhutoria addressed critics of the first cryptocurrency about the six most common theses.

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