Fidelity Digital Asset Service (FDAS) applies for Trust License in New York
Fidelity Digital Asset Service (FDAS), the crypto sidearm of the Wall Street Brokerage Firm Fidelity has applied for a Trust license in the New York Department of Financial Services (NYDFS). FDAS provides custody services for digital assets in a handful of states currently. If their application for the Trust license gets approved, they can officially start availing their custody services to the New Yorkers as well.
FDAS currently offers storage and trading solutions to the institutional crypto investors of Bitcoin. The firm has acquired its custodian license back in October last year, and with the Trust license on the card, it is slowly expanding the portfolio of services.
This May, a Bloomberg report suggested that the firm was looking to expand beyond custodian services and look for obtaining a brokerage license to trade on behalf of its institutional clients. Fidelity joins the likes of Bakkt which has also applied for a trust license to become the qualified custodians of Bitcoin for its future contracts.
BitLicense vs Trust License
Bitlicense is a mere trading service license which allows a firm to offer crypto trading services on their platform, however, Trust license covers a broader spectrum of services related to crypto. With a Trust license, a firm can avail and venture into a plethora of service offerings including financial advice and brokerage services.
Obtaining a Trust License from NYDFS could take almost half a year, and would allow FDAS to operate as a limited purpose Trust company. Lawyer Arthur Long explains why obtaining a Trust License in New York can take so long, “Any bank or trust company is going to have to go through a substantial process so that the regulators understand the business,”
Tom Jessop, the head of Fidelity Digital Assets earlier this year explained how the firm operates and how it is different from the tradional trading. He said,
“We are not prop trading, we don’t have a desk,. We are purely acting as effectively an agent, and that’s what our clients want. Our clients want to avoid the issues associated with funding on multiple exchanges, both administrative risk, or otherwise, they want something resembling the best price experience, and so we’ll try to do that by bringing liquidity providers, and other sources of liquidity onto our platform. I think effectively a smart order router, or logic, that would interrogate the market, find the best better offer, and allow the client to execute at that price.”