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Following Fidelity’s Bitcoin Soft Launch, IBM Delves Into Crypto Custody

New York Firm Launches Crypto Offering

2018 may have seen Bitcoin (BTC) fall by over 70%, but institutions and powerhouses in traditional industries are still actively seeking to get their foot into the crypto door. CoinDesk reports that blockchain-friendly IBM, one of the largest forward-thinking technology companies across the globe, has quietly entered into the cryptocurrency custody space with a little-known partner.

The outlet’s Ian Allison writes that Shuttle Holdings, a New York-headquartered investment group, will be launching custodial services for this newfangled asset class sometime in late-March. Shuttle has purportedly built the offering on IBM’s private cloud service, backed by the Corporate America darling’s encryption technology. It is important to note that Shuttle is offering the tools for cryptocurrency custody, rather than handling the nitty-gritty itself.

Much like other institutional plays in this budding space, Shuttle has started small, offering its solution to a hand-picked list of clients that it believes can handle the cryptocurrency stress. Eventually, however, the company intends to see banks, brokers, custodians, family offices, along with other institutional subsets dabble in the storage of cryptocurrency.

Shuttle and IBM’s venture is not exactly what Bitcoin traditionalists would call cold storage. As hinted at earlier, private keys will be stored not on a device in a vault, but in the cloud (private that is) and secured by a number of layers of industrial-grade encryption. In a presentation at an IBM event, Shuttle’s Brad Chun explained that it sought to harness this method of custody as firms need their cryptocurrency often at a moment’s notice, with a digital system being much more efficient in that regard. He even states that by some measures, Shuttle’s tools will be “just as secure, if not more secure” than regular cold wallets, some of which were proven to have massive security vulnerabilities over recent months. Explaining more about the project, Chun told CoinDesk:

“There are always trade-offs between security and efficiency, but we do not utilize a traditional cold storage system. Instead, we keep keys at rest encrypted in multiple layers as data blobs so that an organization can store these backups using their pre-existing disaster recovery and backup processes and media.”

Interestingly, Chun mentioned that he attempts to push Shuttle’s custody service to eventually service real world asset-backed tokens, like those for real estate (land titles), shares of both private and public standing, among others. As Anthony Pompliano, Jeremy Allaire, among others are pushing for a tokenized world, this may only make sense.

This offering comes after IBM’s blockchain head, Jesse Lund, told reporters that he expects Bitcoin to end the year at $5,000 before skyrocketing to $1 million as time elapses.

Custody: A Growing Trend

This, of course, only underscores the industry trend of custody of digital assets. Per previous reports,  it has been officially confirmed that Fidelity Digital Asset Services (FDAS), the first fully-fledged crypto platform backed by Wall Street, has gone live. In a number of interviews with cryptocurrency outlets this week, Tom Jessop, a former Goldman Sachs executive turned head of FDAS, explained that his brainchild’s offerings are live for a select list of “eligible clients.” Jessop adds that at the moment, the platform only supports Bitcoin, and will be staving off its verdict on Ethereum due to impending blockchain upgrades.

Photo by Annie Spratt on Unsplash

The post Following Fidelity’s Bitcoin Soft Launch, IBM Delves Into Crypto Custody appeared first on Ethereum World News.

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Fidelity’s Crypto Head: Ethereum Upgrades Could Delay ETH Integration

Bitcoin First, Ethereum Later

At long last, Fidelity’s cryptocurrency subsidiary, the fittingly-named Fidelity Digital Asset Services (FDAS), is nearing a full launch. FDAS chief Tom Jessop, formerly of Goldman Sachs, Standard & Poor’s, among other Wall Street institutions, touched on the subject matter in an interview with CoinDesk. He told the outlet that while the branch’s advent is nearing, they have yet to integrate Ethereum (ETH).

Jessop remarked that his organization has created an evaluation process for cryptocurrencies, likely much like Coinbase’s, in a bid to support bonafide projects with potential. Currently, FDAS has only given Bitcoin (BTC) its stamp of approval, even though Jessop has stated that Ether and other popular cryptocurrencies may see support eventually. He elaborated:

We’re currently supporting bitcoin, we have designs to support other coins over the balance of the year center to various criteria including our [in-house selection framework], where we obviously look … at client demand and other things.

These “other things,” which are universally applied to other assets, like Ethereum, include the decentralization status of a coin (presumably the number of nodes/miners, consensus mechanism, hashrate distribution), the level of demand from the Boston-based firm’s clientele, the peculiarity of the blockchain, which would affect how FDAS integrates the asset. While Jessop did hint that his crypto firm’s clients have expressed interest in Ethereum-related services, he noted that with upcoming hard forks/blockchain upgrades, like this October’s Istanbul or the following years’ steps towards Serenity, Fidelity may need to “see how those things work out.”

If Jessop is serious, that means that ETH services may not launch on FDAS until late 2019, months after the initial launch of the startup. But to give his reasoning some more credence, he drew attention to Ethereum Classic, which suffered a 51% attack to its blockchain earlier this year. While the same isn’t likely to occur to the ETH chain, Jessop & Co. may be worried about the stability of the chain following a further step towards PoS (which miners may find contentious).

Crypto Services Live For Eligible Clients

While the lack of Ether support may irk some of Fidelity’s thousands of institutional clients, the bottom line is that the service is live. A recent tweet from the Wall Street-backed startup corroborated this. Citing a company update which Ethereum World News reported on previously, FDAS revealed that it is now live, or at least in a limited capacity. The firm tweeted the following seemingly in tandem with the Coindesk report:

Moving ahead into 2019, Jessop intends to see his firm scale, specifically in a bid to see FDAS consume 90% of the States’ institutional crypto market. He claims that this scaling will take the form of regulatory green lights, along with ironing out any bugs in the platform. This will be of utmost importance, as the FDAS head noted that Fidelity has seen a “significant amount of demand” in regards to cryptocurrencies, from crypto-native firms to hedge funds.

This could finally be a positive sign for this market moving forward. Just yesterday, prominent analyst The Crypto Dog took to Twitter to lay out a number of reasons why Bitcoin bears shouldn’t, well, be bearish. A primary facet of his list, which includes Binance’s ventures, Argentinian government blockchain involvement, and Bakkt’s (potential) Starbucks integration, was the launch of Fidelity’s cryptocurrency arm. CNBC contributor Brian Kelly touched on this too, explaining yesterday that this is one reason why it appears that the “crypto winter” is starting to thaw.

Title Image Courtesy of Descryptive.com Via Unsplash

The post Fidelity’s Crypto Head: Ethereum Upgrades Could Delay ETH Integration appeared first on Ethereum World News.

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Fidelity's Charity Arm Raises $22 Million in Bitcoin in 2017

Bitcoin investors and users have now donated $22 million worth of the cryptocurrency to a charitable trust run by mutual fund giant Fidelity Investments so far in 2017.

According to new figures released by the company, Fidelity Charitable saw donations worth $11 million through November, a figure that has doubled since the start of the month, CNBC reports.

Matt Nash, senior vice president of donor engagement at Fidelity Charitable, credited the uptick to the “giving season” as well as the tax advantages of the donations, stating:

“People are getting smarter about donating appreciated assets, and bitcoin is the epitome of appreciated assets this year.”

The charity utilizes Coinbase’s payment processor tools to handle bitcoin-to-dollar conversions, and the converted cash is then deposited to the patrons’ “donor-advised funds.”

The report also hints at the psychology behind the giving, as cryptocurrency holders in the U.S. are required to pay a “capital gains taxes” in case they plan to cash it out. Donating to charitable organizations, however, allows them to avoid those taxes.

The charity is accepting bitcoin donations until Dec. 22, it added.

Overall, the growth suggests a continued interest in the program, which Fidelity launched in Nov. 2015. (Fidelity Charitable raised $7 million in bitcoin as donations last year.)

Small change image via Shutterstock

The leader in blockchain news, CoinDesk is an independent media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. Have breaking news or a story tip to send to our journalists? Contact us at news@coindesk.com.

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Ethereum and Bitcoin Dominating at Being Mined: Fidelity Mining Crypto

The brokerage giant Fidelity – is not just studying cryptocurrencies, it is mining them. This has been revealed by its CEO Abby Johnson on a tech conference this spring.

This different way of usage of its computers by Fidelity has been going on for three years now, as they harvested Ethereum and Bitcoin which equals to ‘money making machines’ as digital assets are trading at $4,300 and around $300.

From the Fidelity labs – Hadley Stern tells Fortune that the mining project is modest but making quite the profit as the CEO reported that it is making a lot of money. The sum has risen as the values of virtual currencies have experienced a significant increase over the years. Ethereum in the beginning of 2017 only traded at $8 while Bitcoin in 2015 was pairing with the US Dollar around $200.

Even despite the profit seems very good and positive in many ways to the company, the true purpose of the mining procedure taking place is to learn really about the burgeoning digital currency market”

“Think of it as an experiment. The real reason we began mining, and still do, is to learn how the network works, how consensus works, how difficulty levels work,” says Stern.

Stern adds that Fidelity’s mining project is not sophisticated compared to professional operations, which involve companies, most of them in China, connecting giant rooms of specialized computers to cheap sources of electricity. But he says Fidelity continues to learn valuable lessons, including about recent campaigns by miners to create so-called “forks” in blockchains, which serve as an immutable record of all cryptocurrency transactions.

The work that is being done and learnt could give advantage to Fidelity (FNFV, -0.55%) by starting earlier to understand the crypto-world as just now significant financial institutions are dipping their toes into that space.

As we are in the part of big financial institutions – Last month JPMorgan has started handling costumer financial bitcoin orders, while on the other side Goldman Sachs has stoked around words it might open a trading platform for virtual currencies.

The mining project by Fidelity is not the only way they are trying to understand the market and community. Previously the giant has started an arrangement with Coinbase to give visitors of Fidelity to see their digital currency value along stocks and other assets.

Meanwhile, Fidelity has also included bitcoin in a program that helps individuals donate specialized assets, such as fine art, to charity. Stern says the company often conducts interviews with customers who donate bitcoin, in part to learn about their interest in the cryptocurrency.

“It’s another way to assess market demand, get our hands a bit dirty with the technology, and learn what’s going on,” says Stern.

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