Wall Street will be dragged to blockchain ‘kicking and screaming,’ Fidelity CEO says

Fidelity's CEO, Abigail Johnson, has expressed her concerns about the outdated nature of traditional finance systems, describing them as reliant on "primitive technology." She believes that despite resistance, blockchain technology will eventually supplant these systems due to competitive pressures and regulatory requirements. Johnson, who oversees a $15 trillion financial services firm, likened the current financial infrastructure to a convoluted network of reconciliation processes, which she deemed "really kind of scary." At an A16Z crypto event on December 4, Johnson emphasized that the transition to blockchain won't happen overnight. She predicted an evolutionary shift, driven by a combination of market competition and regulatory mandates. Her critique underscores a broader recognition among financial leaders of systemic flaws, rooted in the industry's dependence on outdated technology and its inertia towards change. Smaller financial entities, in particular, struggle to evolve, hampering overall progress. Johnson has been a proponent of blockchain since 2013, but she cautioned that enthusiasm alone won't drive adoption. Instead, market dynamics will force the shift. Companies that fail to upgrade risk losing market share to those that offer faster, blockchain-enabled services. This competitive edge is evident when banks offering instant settlements attract more customers than those relying on legacy systems. Similarly, brokerages providing cryptocurrency custody will gain an advantage over those that don't. Fidelity has witnessed these dynamics firsthand, contending with resistance from traditional finance leaders who were vocally anti-crypto. Johnson persisted, confident that this opposition would eventually dissipate. Indeed, the landscape has begun to change, with major banks exploring cryptocurrencies and substantial investments flowing into digital assets. Regulatory changes also play a crucial role in this transition. Governments are increasingly mandating improvements in transparency, settlement speed, and interoperability—areas where blockchain excels. The U.S. has implemented the Genius Act, with the Clarity Act pending Senate approval by 2026. Meanwhile, Europe's MiCA regulations have been active since 2024. The challenge for financial institutions is not a lack of desire to upgrade but the constraints preventing them from doing so. Johnson highlighted that while some large players are eager to modernize, the industry's structure, with many smaller players, complicates efforts. The interconnected nature of the system means that its capabilities are limited by the weakest links still using outdated technology. Fidelity's commitment to blockchain dates back to 2013, when it began offering Bitcoin custody services and launched mining operations. These ventures have yielded significant returns, with Fidelity's Bitcoin mining business delivering the firm's highest ROI, according to Johnson. Fidelity's Bitcoin ETF, FBTC, manages about $20 billion, second only to BlackRock. The firm recently introduced a tokenized money market fund designed to work with stablecoins, providing clients with flexible investment options. Additionally, Fidelity launched a new Solana ETF in mid-November. Despite these advancements, Johnson acknowledged underestimating the pace of change within the traditional financial sector. She noted the numerous forces that maintain the status quo, keeping institutions aligned with outdated practices.