Fidelity’s once-dormant crypto VC fund is back in action

Quick Take

  • Fidelity’s little-known crypto VC fund is back in action, according to a direct source
  • The fund was inactive earlier this year, but now has a new portfolio manager
  • Fidelity announced in October a crypto trading and custody business 

Fidelity Investments’ crypto venture fund is back in action. 

The $2.5 trillion money manager made a big splash in the cryptocurrency world recently when it announced it was launching Fidelity Digital Assets, a custody and execution services business for digital assets. However, it turns out that’s not the firm’s only cryptocurrency operation. 

As previously reported by Business Insider, the firm launched an exploratory fund in 2017 to invest in crypto-related assets as well as companies in the space.. It became inactive earlier this year after a number of key employees exited the firm. The Block can report that the VC fund is active again with a new fund manager, according to a person with direct knowledge of the situation.

Matt Walsh and Nic Carter formerly led the fund, which used capital from the firm’s balance sheet to invest in crypto assets. Recently, Carter and Walsh left the firm to start Castle Island Ventures, a Bitcoin-focused crypto VC fund. But Fidelity is firmly committed to early stage crypto and is revving up the funding engines. Sachin Patodia is overseeing the refreshed fund, according to the source. Patodia has been with Fidelity for more than 11 years, serving as an equity analyst per his LinkedIn. The rejuvenated VC fund is described as “bigger” than it was when Business Insider first reported on its existence.

Fidelity’s Crypto ambitions 

Fidelity’s efforts in crypto began in 2014 with research and development, Tom Jessop, head of Fidelity Digital Assets, told The Block. Then the firm examined mining in 2015. At the end of last year, Fidelity saw more opportunities in the institutional space among family offices and startup crypto funds. Last year, the firm partnered with Coinbase to allow Fidelity clients to view their crypto holdings on the digital-asset exchange. 

“Fidelity’s commitment, not only to this space, but other innovation projects is significant,” Jessop said. “As I go around and talk to folks [at Fidelity], I think the thing they are surprised about is that markets are already this big and there is meaningful activity … There is a future value to the underlying technology that probably transcends bitcoin and ether.”