Fidelity Investments opened Thursday’s waiting list for its new cryptocurrency investing service for individual investors. This move could allow digital assets to be introduced to approximately 40 million of the company’s individual clients.
Fidelity Crypto might be a good option for investors who are interested in crypto and know and trust Fidelity when it comes to their investments.
If you are a seasoned crypto investor, you may not be interested in switching to these new offerings. Fidelity’s low trading fees are comparable to some of the top crypto exchanges. However, the company has not yet announced the availability and quality of crypto functionality.
Fidelity will initially offer two cryptocurrencies, Ethereum and Bitcoin. Users won’t have the ability to send or receive crypto from their accounts. This is a major problem for anyone who wants to use cryptocurrency for payments or access blockchain-based services online. However, you will be able sell crypto for fiat currency.
Why you may want to sign up
Fidelity Crypto allows you to join the waiting list on its website. However, the company has not yet announced when the service will be available. While you wait, here are some things to keep in mind.
Crypto trading charges
Fidelity offers customers “commission-free” cryptocurrency trading. Trading is not always free. According to the company, it will accept crypto trades with a spread of as high as 1%.
This is still a good rate of return compared to other crypto services NerdWallet has reviewed. Coinbase, the largest U.S.-based crypto exchange, charges $2.99 for simple transactions. Small purchases would incur a 1% surcharge.
Other cryptocurrency services may have higher fees. Some can go up to 10%, depending on how much you pay.
Minimums and funding
If you have a brokerage account or cash management account with Fidelity, funding a Fidelity Crypto account can be simple. Fidelity Crypto accounts will allow you to transfer money into Fidelity Crypto.
To open a crypto trading account, there is no minimum deposit. Fidelity also states that the minimum purchase of crypto will be $1. These factors place Fidelity on par with other major exchanges.
To make purchases, you will need to open and fund a Fidelity account.
Why might you want to use another exchange
Fidelity Crypto initially will be available in 35 states. You will need to find another alternative if you are unable to access Fidelity Crypto in your state.
If your state isn’t listed, you can still sign up for the waitlist. However, the service won’t work unless Fidelity adds crypto services.
NerdWallet has rated Fidelity Crypto as one of the lowest-end cryptocurrency platforms. Bitcoin and Ethereum are two of the most valuable cryptocurrency, so they are well-known and widely used in this new sector.
Cryptocurrency traders may consider more options when buying or selling cryptocurrencies. Crypto.com is another popular cryptocurrency exchange that offers more than 250 cryptocurrencies. There are also more options for crypto at other brokerages. Webull has 40 options.
Fidelity may follow the lead of Robinhood and other brokerages like it. They started out with limited crypto offerings but grew over time.
Fidelity may allow users to trade cryptocurrency for one another.
Fidelity Crypto will not offer advanced features that are available on other exchanges. Fidelity Crypto will not allow stake, which allows holders of certain cryptocurrencies to receive rewards similar to interest.
Fidelity Crypto won’t offer 24/7 trading and will limit trading to between 4 and 12 AM Eastern Time, unlike other crypto exchanges.
The company also stated that it would not allow customers to send cryptocurrency from their accounts to other crypto wallets.
If you plan to do anything other than keep it in the hope that it will rise in value, transfers are essential. Fidelity will not allow you to use crypto bought through Fidelity for decentalized financial products.
The bottom line
Fidelity’s initial attempt at a consumer cryptocurrency product was not the strongest, but the brand and track record of the company may provide some comfort for customers moving into a risky asset class such as crypto. The company is open to expanding its capabilities and features in the future.