Amid Crypto Banking Crisis, Fidelity Bitcoin, Ether Trading Opens Retail Accounts

Fidelity Investments has quietly opened access to bitcoin and ether trading to all of its retail traders, filling a void created by the closures in recent days of cryptocurrency-friendly banks that bridged the divide between digital and traditional finance.

The Fidelity Crypto platform, previously only available to institutions and some waiting list customers, was made available on Wednesday. Individual investors can now buy and sell bitcoin and ether and use custody and trading services provided by Fidelity Digital Assets.

Customers cannot yet transfer cryptocurrency to or from their Fidelity accounts. The company so it would explore cryptocurrency transfers in November, shortly after the waitlist announcement, but has not given a clear timeline.

The separation of investors from the passwords known as private keys that allow direct owners to hold their cryptocurrencies combined with the inability to transfer ownership means Fidelity retains custody of the assets. A string of bankruptcies among crypto exchanges and investment programs last year illustrated the downsides of leaving digital assets to intermediaries, though Fidelity’s size and reputation likely mitigates the risk.

The company has not responded to one Forbes ask for more information.

Trading is only open to US citizens over the age of 18 who live in one of the 36 states where Fidelity Digital Assets provides services.

Following in the footsteps of stock trading app Robinhood and crypto exchange Binance.US, the asset manager has touted the offering as commission-free, but there’s a catch: a 1% fee will be added to each transaction. The company calls the fee a spread and defines it as “the difference between your strike price and the price at which Fidelity Digital Assets fills your order.”

The move comes at a time when the US cryptocurrency market is facing regulatory pressure, triggered by several high-profile collapses last year, and the closure of crypto-friendly banks including Silicon Valley Bank, Silvergate and Signature.

Still, the Fidelity service “provides both the credibility that crypto has needed and the opportunity for investors, most of whom rely on their financial advisors for investment strategies,” said Ric Edelman, a financial advisor and founder of the Digital Assets Council of Financial Professionals.

In addition to cryptocurrency trading, Fidelity also offers the Fidelity Ethereum Index Fund, which tracks the performance of the coin in US dollars. In December, the asset manager filed three trademark applications to offer NFT and metaverse investment services.