Fidelity Sounds Alarm on AI Impact on Cryptocurrency Market

Fidelity Digital Assets has shed light on its analysis of artificial intelligence's potential impact on the cryptocurrency market, particularly in relation to public blockchains and stablecoin infrastructure. According to Fidelity, AI agents may prefer closed payment networks over public chains due to cost-effectiveness and regulatory friendliness.

In a report published on August 19, Max Wadington highlighted six risks associated with the AI-agent thesis, including the possibility that agents may opt for the most cost-effective option, which does not have to be a public blockchain. This could lead to lower-than-expected activity on public chains and missed opportunities for token holders in terms of fee revenue.

The divergence between Fidelity's Ethereum Fund (FETH) and its Bitcoin fund (FBTC) became apparent on Thursday, with FETH outperforming FBTC by 4.49 percentage points. Circle Internet Group Inc.'s shares also climbed higher than FBTC's, despite the company's own analysis indicating that stablecoin providers, custodians, and closed payment systems may capture more value.

Fidelity Digital Assets' introduction of the Fidelity Digital Dollar (FIDD) in February positions the company as a critic of the sweeping AI thesis and as a potential beneficiary of infrastructure growth. Circle's broad analyst target range highlights continued uncertainty over how value will be divided, with targets ranging from $37 to $175.

The question of who controls the long-term margin remains unresolved, and regulatory actions, cybersecurity incidents, and declining interest income may also determine which rails retain value.