Fidelity Digital Assets, the crypto custodian arm of Fidelity, experienced a significant downturn in 2023, recording nearly a 60% revenue drop and escalating losses surpassing £7 million.
Established in 2018 to expand Fidelity’s crypto services, Fidelity Digital Assets reported revenue of £545,000 (~$695,000) for 2023. This marks a steep 59% decline from the £1.34 million generated in 2022, according to documents filed by Fidelity with Companies House, as reported by Financial News.
The company’s financial woes were exacerbated by a 32% increase in operating expenses, which soared to £7.8 million in 2023. The rise in costs was primarily driven by higher staff salaries. Consequently, Fidelity Digital Assets posted a loss of £7.1 million for the year, a substantial increase from the £2.5 million loss recorded in 2022.
Fidelity attributed the revenue decline to a drop in service-level agreement fees but remains optimistic about future growth. The company forecasts an uptick in revenue, anticipating increased business activity in custody and trading services with the onboarding of new clients.
The challenging year also saw the departure of key personnel. In early 2023, Chris Tyrer, Fidelity’s crypto chief since 2019 and head of Europe, left the company. Tyrer subsequently joined Bullish, a crypto exchange backed by Peter Thiel, as head of strategy in late May.
Additionally, in mid-May, crypto.news reported that Synnax, an AI-driven financial platform for credit analysis and ratings, recruited Luc Froehlich, former head of digital assets at Fidelity International, as its new chief commercial officer to spearhead the firm’s commercial strategy and operations.
Despite the setbacks, Fidelity Digital Assets is poised to leverage its existing infrastructure and client base to rebound in the coming years, driven by anticipated growth in its custody and trading services.
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