Blockchain May Be 'an Existential Threat' to Fidelity, Institutional Head Says

Some of financial services giant Fidelity’s core activities of clearing services and financial intermediating are ripe for the efficiency gains promised by blockchain technology, the head of its institutional branch said Tuesday. 

“In some sense, it’s an existential threat to what we do,” said Mike Durbin, head of Fidelity Institutional, at CoinDesk’s Consensus 2021. Now, that "threat" is getting attention from the very top of the global giant. 

“There is the intellectual curiosity of what this technology could do for us, or to us, over the coming years,” Durbin said in a conversation with The Block's Frank Chaparro. “Cryptocurrency just happens to be the tip of the spear.” 

The main driver of Fidelity’s increasing involvement in the crypto space is client interest, as Durbin, who has run Fidelity Institutional since 2017, was keen to make clear. 

“We follow the demand of our clients. These tend to be first-generation wealth creators looking for an easy, frictionless way to make an expression in crypto,” he said.

Durbin said the recent volatility of crypto prices in response to Elon Musk’s tweets had shaken some clients’ confidence in bitcoin as a store of value. 

“It definitely gets a little more difficult,” he said. 

But in his view, these are just “blips along the way” as the sector matures. One of the main applications of bitcoin investing – as a diversifier due to its lack of correlation with other asset classes – still stands. 

Durbin confirmed his own personal interest in crypto investing, too: “I’ve dabbled myself over the last few years.”

A new Fidelity-affiliated bitcoin exchange-traded fund (ETF) is currently making its way through the process of regulatory review. Wise Origin first filed for the ETF with the U.S. Securities and Exchange Commission in March and partner Cboe BZX Exchange filed a 19b-4 form acknowledging its support earlier this month. Durbin was not able to comment on the filing.