At the 2022 Consensus Conference in Austin, Texas, Abigail Johnson, chairman and CEO of Fidelity Investments, offered battle-tested advice to the crowd, saying her belief in the long-term fundamentals of cryptocurrencies remains strong.
“I think this is my third cryptocurrency winter. There’s a lot of ups and downs, but I think it’s an opportunity,” Johnson said of the bear market.” I was raised to be a contrarian, so I have this knee-jerk reaction. If you believe the fundamentals of a long-term case are really strong, when everyone else is falling [out], that’s the time to double down.
To be clear, though, Johnson doesn’t sound optimistic about the recent sharp correction. “I’m sad about the lost value, but I also believe the cryptocurrency industry has a lot of work to do,” she said.
Fidelity – which Johnson’s grandfather founded the year after the end of World War II – formed a separate legal entity called Fidelity Digital Assets in October 2018. But the Boston-based closely held investment brokerage (and Johnson in particular) has involvement dating back to the early days of bitcoin around 2014, a journey she recalled in a fireside chat with Castle Island Ventures founding partner Matt Walsh on Thursday afternoon.
Intrigued by this “clean way to transfer finance and wealth,” Johnson recalled that Fidelity came up with “about 52 use cases” for bitcoin, the vast majority of which ended up getting bogged down in complexity and tied up.
Early on, the decision to focus on the technical foundation level led Johnson’s team toward escrow – but it wasn’t one of the company’s initial use cases, she says, adding frankly that she didn’t make as much progress on the product side as she had hoped at the start of the journey.
“When we first started talking about it, I thought if someone suggested escrow for Bitcoin, I would say ‘No, that’s the opposite of Bitcoin. Why would anyone want to do that?”
Fidelity was one of the first major institutional players to deal directly with cryptocurrencies, rather than dabble in a watered-down version of blockchain technology, which has been the fashionable route for businesses for some time. Walsh hinted at the distinction, quipping, “It’s not like you’re putting lettuce on the blockchain.”
Johnson also talked about her decision to get into bitcoin mining at an early stage, which caused consternation and confusion for many around her in the financial services sector. In fact, back in 2014, even most cryptocurrency people wanted to do something more interesting than mining, Johnson said.
“I really wanted to do mining because I wanted us to understand the whole ecosystem, and I wanted us to have a seat at the table with the people who are really driving things and understand the whole stack,” Johnson said.
Johnson said she hatched a plan to spend about $200,000 on bitcoin mining equipment, which was initially rejected by Fidelity’s finance department.” People said ‘What’s this? You want to buy a bunch of boxes from China?’”
Johnson noted that she no longer needs to justify entering the mining industry as mere “creative theater,” adding that she feels equally empowered and committed to Fidelity’s recent move to provide bitcoin exposure to its clients’ 401(k) retirement plans.
“I never thought we would get so much attention for bringing a little bit of bitcoin to the 401(k) business,” Johnson said.” Now a lot of people, they’ve heard about it, have been asking about it, so I’m pleased with the amount of positive feedback we’ve gotten on that.”
That said, the move to bring cryptocurrencies into the 20 million or so retirement plans it regulates was immediately opposed by the U.S. Department of Labor as well as Sen. Elizabeth Warren (D-Mass.), citing concerns about the volatility of cryptocurrencies.
“It’s very encouraging and exciting for us to see some regulators trying to lean into this,” Johnson said.” Because if they don’t give us a route to make some of these connections, then it makes it really hard for us to be able to make it feel seamless in the background.”
Post time: Jun-10-2022