Finance

Fidelity’s crypto unit revenue surges 1,800% as hiring boom adds to costs


Revenue spiked at Fidelity’s fledgling digital assets business in the UK last year, as more institutional investors flocked towards trading and holding crypto.

But despite a 1,804% jump in turnover, the unit’s loss widened to £3.4m as staff costs also swelled.

Accounts filed with Companies House in the UK show Fidelity Digital Assets generated revenue of £758,950 in the 12 months to the end of December, up from £39,856 for 2020.

The business, which launched in Europe in 2019, was hurt by a significant increase in expenses, including staff costs which more than tripled to £1.1m for the year, up from just over £305,000 in 2020.

Overall operating expenses of £4.1m were up almost 47% on 2021, with office space and technology among some of the costs that experienced the biggest year-on-year increases.

READ Fidelity Investments bolsters tech headcount to meet institutional crypto demand

Despite the widening loss for the business — which was £2.8m in the red for 2020 — Fidelity is bullish about the long-term prospects.

Revenue will continue to gain in 2022, with “increasing business activity in custody and trading services” as new clients onboard, Fidelity said.

A spokesperson for Fidelity added: “While our filing does reflect business activity within our registered UK entity, this would not be indicative of our entire international business as a number of clients onboard as clients within our New York state-chartered trust company, Fidelity Digital Asset Services LLC.”

The results for the European business come amid ambitious plans from Fidelity to double headcount this year across its digital assets business globally.

Fidelity Digital Assets plans to hire 110 tech workers, including engineers and developers with blockchain expertise, to build digital infrastructure to support services for cryptocurrencies beyond bitcoin. It also plans to add 100 customer-service specialists, its president Tom Jessop told The Wall Street Journal in June.

The expansion plans come after a brutal downturn for the crypto market over the past couple of months, a rout that has wiped more than 2,700 jobs from the sector.

“We are trying to build infrastructure for the future because we measure success over years and decades, not weeks and months,” Jessop told the WSJ.

READ Schroders takes stake in digital assets firm Forteus in step towards tokenised funds

Other asset managers are beginning to express an interest in digital assets.

Schroders announced in July it had acquired a minority stake in Forteus, an asset manager focused on blockchain and digital assets, which is also the asset management arm of Swiss firm Numeus Group. The move could potentially allow Schroders to offer tokenised funds to investors.

Located in Zug’s ‘Crypto Valley’, Numeus describes itself as a “crypto collective focusing on research, venture capital, market making, asset management and algorithmic trading”.

Schroders said Numeus’ research and technology platform will enable it to “harness the transformational benefits that blockchain can bring to the asset management industry and develop our tokenisation strategy”.

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To contact the author of this story with feedback or news, email David Ricketts

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