Fidelity Bitcoin Trading Now Offered: A Positive Development?
Fidelity Investments has low-key opened its cryptocurrency trading platform to all retail traders, allowing them to trade BTC and ETH. Seems like the move may have been a response to the recent collapse of crypto-friendly banks (SVB and Silvergate). Is Fidelity trying to fill the gap between traditional finance and cryptos in the U.S? It’s likely they view this as the most opportune time to roll out what they had already planned.
Previously, the Fidelity Crypto platform was only available to institutions and a few waitlisted clients. Now, individual investors can buy and sell BTC and ETH while utilizing the trading and custodial services provided by Fidelity Digital Assets.
However, there’s a major downside to this. As of the time of this writing, clients still can’t transfer their crypto to or from their Fidelity accounts. Fidelity had announced plans to explore such transfers in November, but no clear timeline has been provided.
Since Fidelity retains custody of the assets, and clients aren’t provided access to their private keys, they’re unable move their crypto holdings to a secure hardware wallet.
Another downside is that there’s a 1% fee added to each transaction. Hard time imagine paying that much after being spoiled with free spot trades on this exchange, but there’s always tradeoffs. Users of the Fidelity service probably aren’t yet familiar with the ins and outs of self custody yet, and are likely happy to finally be getting exposure to the assets.
Trading is currently only available to US citizens over the age of 18 who reside in one of the 36 states where Fidelity Digital Assets offer services.
Fidelity also offers the Fidelity Ethereum Index Fund, which tracks the performance of ether in US dollars. Fidelity also filed 3 NFT/metaverse related patent applications in December.
While seasoned crypto traders and those who understand the importance of self-custody won’t be using this new Fidelity service, the gateway has the potential to facilitate the movement of a lot of money into the market.
(I just hope that institutional, non-custodial crypto trading doesn’t end up like the silver market where paper-shares of “ounces” can be sold in excess of the amount of physical silver that’s actually kept on hand).