A recent report indicated that dozens of crypto funds closed down in 2019, but the president of Fidelity Digital Asset's thinks this isn't a big concern.
On this week's episode of The Scoop, Tom Jessop told The Block that the closing of early-stage funds has the firm somewhat bearish in the short-term. Last week, Bloomberg reported that nearly 70 crypto funds have shut their doors this year.
But the closures more closely resemble the early days of Internet startups, according to Jessop.
"Those folks were potential customers, but I also say in many cases – whether it was the retail push in late 2017 or some of these nascent funds forming and then closing in the span of 18 months – it's just your classic, early-stage will they make it or not," he said.
The fact that some closures are happening is a healthy sign resembling early activity of other industries, according to Jessop. And even though the closed funds represented a range of possible clients, Jessop said Fidelity is more focused on new business and diversity of clients.
Rather than the health of early-stage funds, Jessop said Fidelity tracks the range of client type and why they're interested in crypto as a better indicator for growing activity in the space.
Indeed, Jessop said Fidelity has seen a steady increase in client diversity since 2018. At that time, Fidelity primarily serviced crypto funds, hedge funds and other clients in the same vein, according to Jessop. Now, the branch has a large family office and macro fund that has crypto allocations with a number of smaller, crypto-focused funds.