This recap features updates on bank technology, payments, online lending and other news in the U.S. financial technology space. Send tips, ideas and chatter to rachel.stone@spglobal.com. For other recent fintech news, click here.
One of America's largest investment firms wants to move into the cryptocurrency marketplace, the latest traditional financial company to take the plunge.
Fidelity Investments is seeking a DevOps system engineer to design and create a cryptocurrency exchange for both the public and private clouds, Business Insider reported June 6.
When reached, a company spokesperson said the firm, which already runs a blockchain incubator, is now hiring to explore different aspects of cryptocurrency-related technology.
"We see the future of financial services taking place on open and permissionless ledgers, with technologies like digital assets, currencies and blockchains," Jessica Macdonald, director of external communications, said in an emailed statement. "We are very actively exploring what this may mean for Fidelity."
Fidelity is a mainstay of 401(k) services and other retirement products for Americans and manages about $2.5 trillion in assets. Morningstar analyst Robby Greengold said the company has previous embraced technology across its business lines, but he was not necessarily expecting it to explore cryptocurrencies.
"It makes sense for Fidelity to dip its toe in the water, but it remains to be seen whether this is going to usher in a new era of cryptocurrencies," Greengold said in an interview.
Fidelity's competitors have already taken their first steps into crypto assets. Charles Schwab Corp., TD Ameritrade Holding Corp. and E*TRADE Financial Corp. all offer trading of bitcoin futures, a feature that Fidelity does not provide.
Leaders in the cryptocurrency space have welcomed more involvement from brand-name financial firms.
"We're excited to see the entry of traditional players into the crypto space because we think it helps drive the validation of crypto as a new legitimate asset class," Kayvon Pirestani, director of institutional sales at Coinbase Inc., said at the Sandler O'Neill Global Exchange and Brokerage conference on June 6.
Buy-in from institutional investors is also "incredibly important," he added. A larger corporate presence would diversify the investor landscape, which is currently dominated by retail, and would help reduce volatility in cryptocurrency prices, Pirestani said.
Coinbase itself made several announcements this week. In addition to entering the Japanese market, the U.S. cryptocurrency platform is trying to secure regulatory approval to operate as a broker/dealer. Through several acquisitions, Coinbase hopes to gain a broker/dealer license, an alternative trading system license and a registered investment adviser license.
In other regulatory moves, Goldman Sachs Group Inc.-backed Circle Internet Financial Ltd. intends to seek a federal banking license and pursue an SEC registration as a brokerage and trading venue, its CEO said. In its discussions with the Office of the Comptroller of the Currency, Circle reportedly said it would develop standards for acting as a custodian of cryptocurrencies, a key challenge facing traditional financial firms that plan to handle those assets.
U.K.-based fintech startup Revolut Ltd. also plans to apply for a banking license in the U.S. by the end of 2018, its CEO said. The company currently offers personal loans, cryptocurrencies and small business banking services, and it plans to launch services in the U.S. this summer in partnership with a bank.
Elsewhere in fintech, Cayman Islands-based tech startup Block.one raised $4 billion in its initial coin offering of EOS. This ICO, which launched in 2017, is the largest to date and makes EOS the fifth-most-valuable cryptocurrency, according to CoinDesk.
Bitfinex, one of the largest cryptocurrency exchange platforms by trading volume, shut down briefly June 5 due to a cyberattack, the company tweeted. In 2017, the Hong Kong-based exchange lost about US$65 million in bitcoin after cyber criminals hacked into its system. Bitfinex told CNBC that this recent attack only affected trading operations. "User accounts and their associated funds [and] account balances were not at risk at any point during the attack," the spokesperson said.
On the insurance front, Willis Towers Watson PLC, along with several partners, used blockchain technology in insurance transactions for marine insurance. The technology will support more than half a million automated blockchain transactions and help manage risk for more than 1,000 commercial vessels in the first year, the company said.
From June 1 to June 7, the SNL U.S. Financial Technology Index rose 1.69%.
A recent report from S&P Global Market Intelligence explores how banks and insurers are embracing fintech innovation. The report looks at recent trends and provides outlooks for the insurtech, digital lending, digital investment management, digital banking, payments and distributed ledger technology sectors. Click here to read the report.
