Fidelity Digital Assets, the cryptocurrency custody arm of Fidelity Investments, has recently reported a significant decline in revenue, with losses reaching £7 million. This decline marks a 60% drop in revenue compared to the previous year, with operating expenses also increasing by 32%.
The financial performance of Fidelity Digital Assets is attributed to a drop in service-level agreement fees. Despite this decline, the company remains optimistic about its future prospects, forecasting revenue growth as it onboards new clients and expands its custody and trading services.
The financial results of Fidelity Digital Assets are based on documents filed by the company with Companies House. The documents reveal that the company generated revenue of £545,000 in 2023, a significant decline from £1.34 million in 2022. Operating expenses increased to £7.8 million, driven largely by increased staff salaries. This resulted in a total loss of £7.1 million for the year, a significant increase from the £2.5 million loss in 2022.
The decline in revenue and increased losses are attributed to various factors, including the departure of Chris Tyrer, the company's former crypto chief. Early in 2023, Tyrer left Fidelity and became the head of strategy at Bullish, a Peter Thiel-backed crypto exchange. Additionally, the company has faced increased competition in the crypto custody space, which may have contributed to the decline in revenue.
Despite these challenges, Fidelity Digital Assets remains committed to expanding its crypto services. The company is focused on onboarding new clients and growing its custody and trading services. This growth is expected to drive revenue and help the company recover from its current financial challenges.
In related news, Synnax, an artificial intelligence-powered financial platform designed for credit analysis and ratings, has onboarded Luc Froehlich, the former head of digital assets at Fidelity International, as its new chief commercial officer. Froehlich will lead the firm's commercial strategy and operations.
Overall, the financial performance of Fidelity Digital Assets highlights the challenges faced by companies in the crypto custody space. Despite these challenges, the company remains committed to expanding its services and driving growth in the future.
