Ivy Leagues are investing in cryptos, and Fidelity wants to be their custodian

By Tony Sagami on October 22, 2018

Last week, I told you about Yale University investing a large chunk of its $30 billion endowment fund in cryptocurrencies.

Not to be outdone, Harvard, Stanford, Dartmouth, the University of North Carolina and MIT have also invested some of their precious endowment dollars into cryptocurrencies, too.

How much each university has invested in cryptos is private. But even just a tiny fraction of Harvard’s $39 billion endowment fund — the largest in the U.S. — would be huge.


Stanford’s and MIT’s endowments are the third- and fifth-largest, while Dartmouth College and the University of North Carolina are in the top 25. We’re talking about gazillions of dollars!

This may all sound very cutting-edge and forward-thinking. But get this: The University of Lucerne in Switzerland not only invests in cryptos, it even accepts Bitcoin for tuition payments. Really! I know this is true because I flew to Switzerland last week to confirm it.


“Those who can, do. Those who can’t, teach.”

Yeah, that’s an old slogan, but I don’t buy it when it comes to multibillion-dollar endowment funds. So, don’t let their Oxford slip-ons and Ivy League bowties fool you.

The people running these endowment funds are some of the smartest investors in the entire world. And when the world’s top academic players are jumping on the crypto bandwagon, you should consider doing the same.

After all, it’s getting easier for investors to put money into cryptocurrencies …

Last week, we talked about how TD Ameritrade (AMTD) is teaming up with Virtu Financial, a high-speed trading giant, to roll out direct trading in Bitcoin, Ethereum, Bitcoin Cash and Litecoin early next year.

But something else happened last week that I think will do more to drive the prices of cryptocurrencies higher than all the buying power of those university endowment funds …

I’m talking about an announcement from Fidelity that it is starting a new company — Fidelity Digital Asset Services, FDAS — that will handle trade execution and cryptocurrency custody for institutional investors.

For now, the FDA crypto services are only available to institutional investors like Harvard, Yale, Dartmouth, Stanford, MIT and UNC. But when one of the biggest brokerage companies in the world decides to offer custodial services for cryptocurrencies, I think a powerful bull market is just around the corner.

“Our goal is to make digitally-native assets, such as Bitcoin, more accessible to investors. We expect to continue investing and experimenting, over the long term, with ways to make this emerging asset class easier for our clients to understand and use,” said Fidelity CEO Abigail Johnson.

Look, Fidelity ain’t stupid. The reason they will start offering custodial services for cryptos is that there is huge demand for it.

Don’t underestimate the importance of custodial services.

Custody service is the one thing that is currently keeping big institutions from buying cryptocurrencies. Why? Because hackers have found ways to steal people’s coins. And once someone steals your coins … they are gone forever!

You think an institutional fund manager wants to explain to his investors that some snot-nosed hacker stole a billion dollars from him? Heck no!

The need for a secure custodial bank to hold onto institutions’ crypto is paramount. And Fidelity is big enough, smart enough and rich enough to devote the resources necessary to make cybersecurity a top priority.

Fidelity says it already has a “robust pipeline of (institutional) customers” ready to start buying cryptos through it. This has me licking my crypto chops!

So, does this …

Fidelity may be the first to offer this service. But it is about to get lots of company in this space. Japanese bank Nomura, Goldman Sachs and Northern Trust are all preparing to offer similar services.

Prediction: Crypto investors are about to get rich.

Of course, you should never put all your eggs in one basket — especially in something as new as crypto.

 

Best wishes,
Tony

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