Nexo, a lending firm, announced a partnership with institutional custodian Fidelity to bring professional bitcoin products to market on Tuesday. Fidelity’s enterprise-grade infrastructure will be used by the lender to expand institutional access to its prime brokerage platform.
According to the statement, “as a first step, the collaboration with Fidelity Digital Assets will expand Nexo’s ability to service and enhance its growing portfolio of assets under management and will provide an additional custody layer to Nexo’s military-grade security infrastructure.”
Nexo stated that the collaboration would allow it to investigate the development of new products for institutional investors, such as tri-party structures for bitcoin-backed loans. Wall Street banks are also reportedly looking into emulating tri-party agreements in order to make institutional cash loans using bitcoin as collateral. The popular traditional finance model employs a third-party agent to ensure that cash and underlying assets are delivered to each party in accordance with the terms of the agreement.
This isn’t the first time Fidelity Digital Assets has experimented with bitcoin-backed loans. Bloomberg reported in December of last year that the custodian had tentatively entered the space in collaboration with BlockFi. It expanded its bitcoin-backed loans in March by bringing on Silvergate as a partner. Nexo is the most recent lender to use Fidelity’s institutional custody and trading platform for the service.
“Working with Fidelity Digital Assets is the latest milestone in our quest to offer a complete institutional platform and to onboard traditional finance companies into the digital asset ecosystem,” said Kalin Metodiev, co-founder and managing partner at Nexo. “With Fidelity Digital Assets’ bespoke custody and security solutions, our client base will now have full access to our industry-leading credit and trading products.”
Nexo claims to have over 2.5 million customers in 200 jurisdictions and to offer bitcoin-backed loans in over 40 fiat currencies.