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Fidelity Digital Assets is to allow its institutional customers to use bitcoin as collateral against cash loans, according to a Bloomberg report on Wednesday.
- The new service will target bitcoin investors who are keen to turn their holdings into cash without selling, as well as hedge funds, miners and over-the-counter trading desks, Tom Jessop, president of Fidelity Digital Assets, told Bloomberg.
- The Fidelity Investments subsidiary will hold the cryptocurrency and not make loans itself.
- Partnering on the initiative is crypto lender BlockFi, which will help manage risk by offering cash worth 60% of a loan backed by bitcoin, the chief executive officer Zac Prince said in the report.
- “As the markets grow, we’d expect that this becomes a fairly important part of the ecosystem,” said Jessop.
- In order to receive the loan, a Fidelity customer will have to have an account with BlockFi.
- Last November, Fidelity Digital was granted a trust company charter from the New York Department of Financial Services, allowing the firm to custody bitcoin for institutional investors.
