Recall that Fidelity offers its mostly enterprise customers a security, trading and digital asset support service, and is one of the largest financial services providers in the world as it has over $8.7 trillion of its customers‘ money under management.
For its part, BlockFi, on the other hand, founded in 2017, was created to give its customers access to financial products they wouldn’t otherwise have access to. One of the strengths of this company are the interest on the deposits that users have by putting their cryptos in this service, blocking them for a certain period of time, for example blocking 1 BTC for 48 months, the total interest comes to just under 5 thousand dollars.
Returning to the news, Fidelity has relied precisely on BlockFi to provide its customers with this type of loans using crypto, to be precise using Bitcoin, as collateral to receive fiat and spend them as the user sees fit.
This service has been requested by many since it is already available in decentralized finance (DeFi) thanks to various protocols and on different blockchains. In fact, the macro category in which this type of tool falls is called lending and borrowing, in which we find on the one hand those who lend their crypto in exchange for interest, and on the other those who borrow crypto by paying an interest (sector explained in detail in the book Mastering DeFi).
Fidelity and BlockFi together for loans in Bitcoin
So this collaboration sees two major players, who among other things boast high security on the custody of users‘ funds, as BlockFi CEO Zac Prince mentioned:
„We are excited to partner with Fidelity Digital Assets to help facilitate capital efficiency within their trusted digital asset management platform. Having the ability to fund positions is a critical component of the financial services infrastructure and this collaboration reflects an exciting development for the digital asset ecosystem.“
But this is just the natural evolution of a service that Fidelity provides to its users, recalling that as early as last year Fidelity had partnered with BlockFi regarding interest-based accounts.
Fidelity’s head of sales and marketing for digital assets, Christine Sandler, commented:
„We continue to see demand for greater capital efficiency from institutions with long positions in bitcoin, and with this collateral brokerage capability, our clients seeking that efficiency can access greater opportunities with the capital they entrust to us to keep it safe. For Fidelity Digital Assets, this is an exciting first step in supporting the burgeoning digital asset lending market and deepening our relationships within the digital asset ecosystem with leading firms like BlockFi, allowing us to provide even higher level institutional solutions to investors in this space.“
Finally, remember that Fidelity itself has always defended Bitcoin from criticism and will soon be ready to offer another major asset such as Ethereum (ETH), demonstrating an openness to other assets as well.
As for BlockFi, instead, we know that Morgan Creek has invested as much as $50 million on this platform.