Fidelity

Fidelity, Schwab Reportedly Tapping Market Makers For Crypto Trading Platform

Key Insights:

  • Fidelity and Schwab will be working with Citadel Securities on its new crypto marketplace.
  • They will not offer crypto trading directly due to U.S. regulatory uncertainty.
  • The institutional crypto marketplace is expected to launch in early 2023.

Mainstream and institutional investors may have more avenues into crypto markets as two more big names enter the fray. As reported by FXEmpire on June 8, Citadel Securities announced plans to build a cryptocurrency marketplace with several partners.

It has been reported that Charles Schwab and Fidelity will be among those working with the firm with a plan to roll out the crypto marketplace in early 2023.

Fidelity Investments provides financial planning, retirement plans, wealth management services, and trading and brokerage services. Last week it was reported that the firm plans to fill 210 new positions for its Fidelity Digital Assets division, signaling longer-term ambitions in the crypto space.

Charles Schwab (SCHW) is an American multinational financial services company, bank, and stockbroker with an electronic trading platform.

Institutional Arrival

According to Barron’s, a Schwab spokeswoman confirmed the move into the crypto sector:

“Schwab has made a minority, passive strategic investment in a new digital asset venture. We know there is significant interest in this cryptocurrency space, and we will look to invest in firms and technologies working to offer access with a strong regulatory focus and in a secure environment.”

A spokeswoman for Fidelity added, “Fidelity supports efforts that further efficiency in the digital assets marketplace and provide more optionality to source liquidity for investors,”

The move could be a big step towards onboarding more institutional and longer-term investors. The current options are limited to crypto exchanges which require some technical knowledge to use, and platforms such as PayPal (PYPL), which recently enabled crypto withdrawals, or Robinhood (HOOD)

It could be that these major institutional players are viewing the current bear market as a buying opportunity. Crypto markets have gone through several boom-bust cycles such as this one over the past decade.

However, Schwab did state that it had no plans to offer direct crypto trading due to the regulatory uncertainty in the United States. The spokeswoman continued:

“We recognize that there is considerable interest in cryptocurrencies, particularly in certain segments of the market, and will consider introducing direct access to cryptocurrencies when there is further regulatory clarity,”

Fidelity does not offer direct crypto trading yet, either. Its clients can get exposure to digital assets through thematic exchange-traded funds. It also announced plans to provide access to Bitcoin (BTC) in its 401(k) plans, a move that has drawn scrutiny from U.S. policymakers.

Crypto Winter Deepens

Crypto markets are back in the red again today, printing a 2% decline in total market capitalization over the past 24 hours. The figure currently stands at $1.29 trillion, down 58% from its peak of just over $3 trillion in November.

Crypto traders and analysts believe that there is more pain to come as the crypto winter deepens. Previous bear cycles have had a ‘capitulation wick,’ or massive final sell-off where the last of the weak hands are flushed out.