Report: Fidelity Digital to Accept Bitcoin as Cash Loan Collateral

Fidelity Digital Assets will allow its institutional customers to use Bitcoin as collateral against cash loans. Through this service, created in partnershipwith blockchain startup BlockFi. Fidelity is targetting Bitcoin investors who want to turn their digital stash into cash without selling, and potential customers include hedge funds, crypto miners, and over-the-counter trading desks, according to Bloomberg, citing an interview with Fidelity Digital Assets president Tom Jessop.

The new service from Fidelity comes after Bitcoin beat its 2017 highest price earlier this month before retreating in recent days. The world’s most valuable digital asset has risen 164% this year, hitting a high of $19,462 on Dec. 3. It traded Monday at about $18,880.

Fidelity Digital Assets began a Bitcoin custody service last year but this is the first time it’s allowing the coins to be used as collateral. To get a loan, a Fidelity customer will have to have an account with BlockFi. Fidelity Digital Assets, a unit of Boston-based asset manager Fidelity Investments will hold the digital asset and not make loans itself.

Fidelity said institutional-investor interest in digital currencies is rising. A survey the asset manager conducted earlier this year found 36% of respondents held crypto in their portfolios. More than six out of 10 expressed interest in Bitcoin and other cryptocurrencies, up from 47% in a 2019 survey.