Transcript
Introduction
Eric
This is Eric Golden, and my guest today is Tom Jessop. As president of Fidelity Digital Assets, Tom leads Fidelity's effort to build a crypto custody solution for institutions. During our conversation, we discussed the use of custodians for blockchain assets, trends and client demand, and Tom's perspective as an incumbent, attempting to build crypto native capabilities. Please enjoy this conversation with Tom Jessop.
Overview of Institutional Custody
Eric
So, Tom, I thought a really interesting place to start with you is that crypto, as an asset class, is really unique, in the sense that it's self sovereign, the nature of digital assets. As a starting place, why do we even need a custodian in the first place for an asset class like this?
Tom
Yeah. I think there are a couple of answers. I mean, I think that if you start through the lens of traditional finance, there are certain entities that require third party custodians. So, there's effectively a segregation of activity, keeping the control of the assets away from the folks that potentially manage them. That's why we have custodians in traditional finance. I think that for the foreseeable future, you'll probably still need that segregation of duties, as you do today for various types of assets. So, that's the first thing. I think the second thing is there's also a question of, yes, you can do it yourself, but do you want to do it yourself? As you know, and others that have gotten involved in the digital asset space, it requires a fair bit of foresight, even structuring your own personal custody. Thinking about storing things on a ledger or trezor, versus using a third party custodian. There may be cases where you have to do that because a custodian doesn't support assets, or it becomes more of a choice. I think anyone going into this space has to decide whether they want to take on that, call it operational responsibility, or give it to a third party that has expertise in doing it on their behalf. So, I think that, yes. It is something you can do yourself and you don't necessarily need custody. It's a little bit ironic, I guess, when you talk about self sovereign assets, but I think there's a reasonable number of folks out there that would choose to effectively buy and manage service.