This interview was recorded at A16Z's recent Founders Summit, hosted by A16Z Crypto CEO Anthony Albanese, with Abigail Johnson, Chairman and CEO of Fidelity Investments, as the guest. The interview focused on key topics such as Bitcoin and early mining, crypto custody, stablecoins, innovative investment models, and "build vs. acquire." In what is being called the "Year of Institutional Adoption," this dialogue showcases how traditional finance is embracing and positioning itself with crypto assets from a completely new perspective, making it particularly representative. Anthony: Good morning, everyone. I'm very pleased to have Ms. Abigail Johnson, CEO of Fidelity Investments, with me today. Welcome, Abigail. Abigail: Thank you everyone. I've heard many people were looking forward to this conversation, and I'm glad we're finally sitting together. Anthony: Let's get straight to the point. You know, my background is in traditional finance. Before joining A16Z, I worked at the NYSE. I know very well how difficult it used to be for a large financial institution to get involved in the crypto space. But you got Fidelity to take that step a decade ago. Why did you do that? And how did you manage it? Abby: Actually, it all started with "curiosity" and "learning." Fidelity has always emphasized a culture of learning, and when we first heard about Bitcoin, like many others, we only had one question in our minds: What is this thing? How does it work? Is it real? In 2012 and 2013, not many people were answering these questions. So a group of colleagues and I started discussing and researching it regularly. Eventually, we realized: there really were some real and important things happening here. We started brainstorming the potential impact of Bitcoin on our business, even listing 52 potential application scenarios. Later, we distributed the project to various teams within the company for validation, and only one direction truly worked—but it was crucial enough. Someone suggested that Bitcoin was creating a massive amount of new wealth, and these people needed a channel to use crypto assets for charitable donations. Fidelity had its own charitable endowment fund, so we became one of the first organizations willing to accept Bitcoin donations. At the time, no other large organization was willing to do so. This established our credibility in the early crypto ecosystem and made Fidelity known to more people. Meanwhile, I maintained that if you wanted to enter this space, you had to start from the basics—like mining. We did the analysis, and mining looked like a good business. And it turned out that if you started mining in 2013, the returns were indeed very substantial (laughs). When I proposed spending $200,000 to buy early Antminer tokens, some people tried to veto it, but it ultimately became one of our most rewarding projects. That's where the story begins. Anthony: What happened next? When did you start offering trading services to clients? Abby: We continued to explore those use cases, although most didn't materialize, but they drove us to learn and experiment. The first client-facing business that truly took off was custody. Honestly, this surprised me a lot. Custody is one of the oldest businesses in traditional finance, and it seemed to go against the "spirit of crypto." However, the demand for custody services from advisors and clients was enormous. Many early holders wanted to plan for the future: how would their families inherit these assets if they were gone? This required a reliable custodian. This led us to the custody business. As a security-focused institution, we have built very robust cybersecurity and traditional security systems, which further solidifies our reputation in the crypto space. With the maturation of these fundamental capabilities, crypto operations are now distributed across multiple divisions at Fidelity: custody exists alongside traditional brokerage; digital asset management drives crypto ETPs; incubation and lab teams explore new crypto technologies; and innovative projects are scattered throughout the company. This distributed innovation allows Fidelity to maintain its leading position. Anthony: You just mentioned the Genius Act, which is a significant breakthrough in crypto policy this year. We've been striving for regulatory clarity for the past few years, and now we've finally taken a big step forward. What are your thoughts on its impact on Fidelity and its clients? Abby: In the past regulatory environment, the crypto industry received almost no attention in its infancy. Many people simply saw it as some strange, outlandish new technology. When you go to Washington, you often see people giving you those "what are you even talking about?" looks. They either don't understand, they don't like it, and most of the time, they simply don't understand. As the buzz surrounding crypto grows louder, but understanding doesn't grow in tandem, this "lack of understanding" actually exacerbates their resistance. As the crypto market continues to expand, it triggers various "negative immune responses." Some existing, even clearly outdated, regulatory rules are being applied in reverse to the crypto space. While these rules are neither applicable nor truly valid, they do create an extremely unfavorable regulatory environment. For a mature company like ours, we have a core business and a long-term responsibility to our existing clients. Despite this, we still constantly receive inquiries from clients: "When will Fidelity start investing in cryptocurrencies? I've already considered getting involved, but my assets are mainly with you. I want to do it through Fidelity, not open an account elsewhere." We've even kept track of how many clients keep calling us because of crypto-related inquiries. What was even more surprising was that many colleagues within the company proactively stepped forward, saying, "I want to be involved in this." This spontaneous enthusiasm was incredibly inspiring. So, we formed a small internal team—a team entirely composed of volunteers willing to engage in all the conversations that were then primarily about Bitcoin. We then began building the foundational capabilities, maintaining our existing business while continuing to observe and await changes in the regulatory environment. However, the regulations didn't improve; in fact, at times they became stricter and more hostile. Therefore, it's especially exciting for us now that the policies are finally becoming clearer and we can "catch up." Anthony: I personally really liked Fidelity's recent report on stablecoins. With the passage of the Genius Act, the discussion surrounding stablecoins has reached unprecedented levels. What do you think is the truly promising aspect of stablecoins? Why is everyone talking about it now? Abby: My first impression of stablecoins was a few years ago, though I can't remember the exact time. At the time, I felt that stablecoins seemed almost the opposite of the logic of the custody business, and I wasn't even sure if it made sense at first. But when I realized that Fidelity had a natural advantage in the "bridging asset" space, I started to really get involved. It excited me a lot. It would be great if more smart people joined us in this direction. We actively fought for a long time for the possibility of stablecoins paying interest, advocating for it passionately. Internally, this sparked a heated debate because it challenged our long-standing business logic. We are always committed to creating returns for investors, either capital appreciation or interest. If we take our clients' money and don't give them any return, it goes against Fidelity's values. Therefore, we persisted in fighting for the possibility of interest until the very last moment. But frankly, if we had continued to insist, the project might have been stalled. I eventually intervened in the discussions, and while disappointed, I understood that compromises had to be made on this point. But importantly: things moved forward, which is a good thing. So we started thinking, "Are there any alternatives?" because we weren't satisfied with ending it this way. I believe we finally found a solution; we launched an on-chain tokenized money market fund with yields consistent with our traditional money market funds, which have consistently ranked among the top in the industry. This design was conceived to compete with the stablecoin ecosystem from the outset. The idea is simple: funds can be placed in the tokenized money market fund to earn market-leading liquidity yields, and then switched to stablecoins with a single click when needed. It's truly a fantastic combination. While the process didn't entirely follow my initial ideal path, this evolution has been very exciting. Anthony: Crypto has always been quite controversial within the banking system. But I appreciate your correct understanding of it. We released our latest "State of Cryptocurrency Report" yesterday, our annual update. One of this year's conclusions is that 2025 will be the year crypto assets see real large-scale institutional adoption. Over the past year, we've met with many large institutions, including Fidelity, and your team was among them. We kept hearing one common theme: many institutions want to enter the crypto space but are struggling with the choice between "building in-house or buying"—developing their own technology or directly acquiring external capabilities. Abby: This is a topic we discuss repeatedly internally. Sometimes it's in-house vs. acquisition, sometimes it's acquisition vs. partnership. Compared to other large financial institutions, we prefer in-house development, but no company can do everything itself. The key is to identify which capabilities are strategically differentiating and ensure you can control them long-term. That's what truly determines long-term viability. Anthony: There are many entrepreneurs here who are eager to partner with Fidelity. What advice would you give them? Abby: Several members of our team are here too. First, we're very happy to listen to everyone's ideas and welcome you to visit Fidelity. We have a very active "BITS Club" with 4,500 members. We host numerous events to foster exchange, with members ranging from crypto industry professionals to anyone within Fidelity who is interested in the field. We also regularly host senior management forums, inviting external partners to share the latest developments; and various business lines also hold many technical or product exchange meetings. Therefore, the answer varies depending on the context, but we have indeed established partnerships with many teams. The essence of crypto is open collaboration; everyone contributes a part, connecting together. We hope to maintain this open dialogue. Fidelity doesn't have rigid rules for cooperation; we maintain a high degree of flexibility in this regard. Anthony: In your nearly ten years as a company leader, president, and CEO, what is the most important leadership lesson you've learned? Abby: I've learned a lot along the way. First and foremost, stay curious and never stop learning. If I don't keep learning, I can't fulfill my role. In terms of organizational operations and culture building, it's a continuous iterative process. One important system I've promoted is internal "mandatory mobility," allowing employees to rotate through different roles periodically, preventing them from staying in the same position for too long. This is extremely valuable. It gives people multidimensional perspectives, rather than being confined to a single way of thinking. In addition, we've spent a lot of time building a culture that encourages people to bring "bad news" as soon as possible. I often say, "Don't just tell me the good news, or I'll have nothing to do." It takes a lot of effort to truly implement this culture. Anthony: So, is there anything you wish you had known from the beginning? Abby: Too many. If I had to pick the most important thing, trust your gut. Everyone has an inner voice that has led you to where you are today. Learn to listen to it and follow it. Now we'll move on to the Q&A session. There are many enthusiastic audience members who want to ask you questions. To allow more people a chance to ask questions, please keep it brief. Hello everyone. Q&A Session Audience: Hello everyone, I'm Abby Banks, a former IDEO employee. Actually, you founded the IDEO Cryptocurrency Collaboration Lab in 2015, and Fidelity also established a related team in the same year. Thank you very much for your contributions to the industry's development over the past decade. One point I was particularly interested in during yesterday's discussion was how the "Genius mechanism" can drive stablecoin and institutional adoption, while the Market Structure Act is also about to be released. I'd like to ask, if this act is passed this year or next, what new chapters will it open? Looking ahead, what are your thoughts? Abby: Our team has been closely following the Market Structure Act. Frankly, every time we receive an update, the content is almost completely different. So I often tell my colleagues, "Maybe I don't need to update so frequently; let me know when things have settled down." Of course, I hope to begin in-depth discussions before the agreement is officially signed. But we still need to reach a consensus on several key issues. Currently, I'm a bit "waiting," but we have a professional team closely following up. I believe that even if the two sides haven't made contact yet, they are very willing to do so. Audience: Thank you for everything you've done. In the crypto-native community, there's a view that all financial systems will be rebuilt on a completely new underlying architecture in the future. On the traditional finance side, some people used to think, "This won't happen." But there's also a middle ground: traditional finance will adopt these technologies and integrate them. Which path do you think the future will take? Abby: We can now completely rule out the "won't happen" option because it's happening. Ten years ago, when we were researching those 52 application scenarios, I did lean towards the first path you mentioned—how will these technologies replace a large number of cumbersome processes in today's systems? If you look at the reality of traditional finance, you'll find that it's almost entirely composed of an extremely complex "network of reconciliation systems." From a macro perspective, it's actually quite frightening. No one intentionally designed the system to be the way it is today; it's simply the result of decades of technological iterations, each layer built upon the technology of its time. Interconnectivity, however, has locked everyone at the lowest possible technological level of the past. This presents a survival challenge for the industry. Large institutions want to accelerate infrastructure upgrades, but the industry is "democratic," and small and medium-sized institutions often lack the capacity to participate in upgrades. Therefore, it's not a question of "whether it will happen," but rather "how it will evolve." Ultimately, it will be a compromise, a gradual process driven by both competitive pressure and regulatory standards. From our own perspective, we are more focused on projects that allow companies to try entirely new approaches and create new opportunities that were previously unavailable. Anthony: Indeed, the financial industry has a great deal of inertia, and ironically, this is precisely because its systems are highly interconnected. Audience: Thank you for sharing, and thank you for bringing legitimacy to this field since 2013. When I was at MIT, most of my colleagues thought I was "crazy" researching crypto. Then Fidelity came to our workshops, and people realized, "Oh, Fidelity is here, this is for real." My question is about Bitcoin. You've witnessed the emergence of different asset classes and driven many financial products. Where do you see Bitcoin next? Not in terms of price, but in terms of its role in your overall asset system. Abby: I don't know if it's because I got in early, or because I'm getting older and more "old-school"—but I really like Bitcoin. I don't hold many cryptocurrencies, but Bitcoin is something I've always kept. I think Bitcoin will continue to play an important role in many people's savings systems. It's the "gold standard" of the entire crypto world—long-standing, extremely stable, and resilient through various cycles; it's a very robust system. Looking at the long term, I have complete confidence in Bitcoin. I believe it will continue to be a crucial asset that we must consider in our overall product portfolio. And I really hope we can be one of the driving forces that make Bitcoin more accessible and usable. Because while Bitcoin's design is ingeniously clever, if some of IDEO's user experience resources had been incorporated back then, it might have allowed more people to participate earlier and more easily. Audience: I received my first internship salary at IDEO CoLab, so hearing this is really special. Thank you. As CEO, you need to balance risk-taking with day-to-day operations. When you face internal resistance, how do you build a strong belief in a new direction? Abby: That's a great question. As I mentioned before, we bring together diverse perspectives and beliefs within the team through employee rotation and team composition. One natural side effect of this is the generation of numerous internal discussions, which I believe are an essential part of a healthy organization. Of course, there's a fine line between healthy discussions and "religious wars." The crypto space has triggered many raw, emotional reactions, at one point even resembling intense "religious wars." You may have seen some traditional financial leaders strongly opposing things in the crypto space in very immature but loudly voiced ways. During that time, I felt I had to remain patient and keep pushing forward. The noise eventually subsided, and many people's resistance stemmed from a lack of understanding, yet they felt frustrated seeing the trend gain momentum. What I tried to do was prevent the conflict from escalating and help the team gradually digest and adapt. This also included our exploration of Bitcoin and other crypto projects at the time. Structurally, we provide a "safe space" for our teams through our R&D lab—which my father founded decades ago—and the internal incubator I later institutionalized—a space that allows experimentation, failure, and even failure that should have been allowed. I often tell the team that if all the projects in our lab succeed, it means we haven't taken enough risks; we need some rapid failures, otherwise we haven't pushed far enough. Once these mechanisms are institutionalized, they create "permission" for the teams to do things that not everyone agrees on, and that's the core of innovation. Anthony: That's very interesting, and very similar to venture capital. If all the companies we invest in succeed, it means we haven't cast a wide enough net, that we haven't taken enough risks. That's great, I like that. Anyone else have questions? Audience: If digital assets and traditional assets eventually merge, what is your vision for this "crossroads"? What aspects of traditional finance will we bring to digital assets? And what will traditional finance learn from digital assets? Abby: Simply put, both. As I mentioned before, I'm more excited about the entirely new things we'll bring to people than about "doing what we're already doing today with a different underlying technology." But it's not that simple. If you go back to my premise that our industry experiences long-term structural deflation (secular deflation), then all technologies will eventually be forced to change. We started migrating our core business to the cloud several years ago. It took us several years of exploration to find a highly reliable and secure approach. Fortunately, we first tested it out in some lower-risk scenarios and learned a lot from it. This is a massive structural migration for us, and it's still ongoing. So you can't help but ask, will some kind of capability emerge in the future that allows blockchain to eventually replace the massive and complex "reconciliation network" of today's financial system? Yes, you can definitely see this trend. The question is, what is the migration path? And how fast will it go? These are things we can only observe and feel as it unfolds. Our current approach is to build the technologies we believe are most likely to be implemented in the short term, while maintaining a longer-term perspective. Surprisingly, we are currently closer to the "bridging phase" than I expected—the point where new and old technologies combine with clearly defined use cases. For example, stablecoins, and "tokenized money market funds." You need stablecoins to participate in DeFi, but if you want to earn interest, you need a digital version of a product from the traditional world. Frankly, I wish I could give a more "scientific" answer, but this is a very difficult question. It's one that everyone must think about and push forward simultaneously. In a way, we are both cause and effect. Audience: You mentioned "long-term structural deflation" twice today. My understanding of it is that technology is causing the prices of everything to keep falling. But from an external perspective, different financial institutions seem to have vastly different levels of acceptance of new technologies. I'm curious, what determines whether an institution is willing to adopt new technologies like crypto assets? Abby: That's a very good question. The answer comes from a combination of two factors: time horizon and willingness to take a little risk. Not regulatory risk, but what's commonly referred to in traditional business—reputational risk. During those "most controversial years," there was frequent discussion within Fidelity about the reputational risks of our involvement in this area, even though what we actually did was quite limited. For example, when we first accepted Bitcoin donations through our charitable foundation, those donations came from people who had just made money with Bitcoin. To me, that sounds a bit crazy; but for many, it wasn't just crazy, it was "untouchable." So I think it's largely a personal factor. And you all belong to a group of creative people with healthy risk appetites. But in large companies, especially in the financial industry, these traits are usually not fertile ground, nor a "breeding ground." Of course, some investors, such as those managing portfolios or hedge funds, are inherently risk-averse. But their risks are all within a predetermined framework. And they most likely don't even think about it—in fact, I'm pretty sure they don't—the technical details and infrastructure that underpin their operations. I think that's what makes Fidelity a bit special; we place great importance on considering the technical details that support our business operations. Over the years, we've learned that the more technology we've personally helped build, customize, or adjust to our own needs, the greater our competitive advantage—especially a sustainable one. This allows us to continuously update our technology and has the freedom to make the adjustments we want. This isn't the kind of thinking I usually see in traditional financial services. Anthony: Okay, Abby, that was a great discussion. Thanks again for joining us; it was really interesting. Abby: Thank you for the invitation, and thank you everyone.
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