Fidelity Investments on Thursday opened the waiting list for its new crypto service for individual investors, a move that could introduce digital assets for the first time to the company’s approximately 40 million individual clients.
Fidelity Crypto could be an appealing offering for investors who are curious about cryptocurrency and already know and trust Fidelity with their investments.
But if you’re already a hardcore crypto investor, chances are you’re not going to be interested in switching for these new offerings alone. While Fidelity’s low trading costs are competitive with some of the leading crypto exchanges, the selection and crypto functionality announced by the firm are not yet up to par.
For instance, Fidelity at first will offer only two cryptocurrencies: Bitcoin and Ethereum. And users won’t be able to send or receive cryptocurrency from their accounts, a must for users who want to use crypto for payments or to access blockchain-based services on the web. You will be able to sell crypto for fiat money, though.
Why you might want to sign up
You can join the waitlist for Fidelity Crypto on Fidelity’s website, though the company hasn’t said when it will begin offering the service. Here are a few factors to consider while you wait.
Crypto trading fees
Fidelity is offering customers what it describes as “commission-free” crypto trading. That doesn’t necessarily mean trading is free. The company says it will take a spread of up to 1% on crypto trades.
Still, that’s relatively good compared with other crypto services reviewed by NerdWallet. Coinbase, the largest U.S.-based exchange focused solely on crypto, often charges a fee of $2.99 on simple transactions, which would exceed 1% on small purchases.
Other crypto services can have significantly higher fees, with some upward of 10% depending on how you pay.
Funding and minimums
Funding a Fidelity Crypto account could be easy if you already have a brokerage or cash management account with the company. You’ll be able to move money from Fidelity accounts into Fidelity Crypto.
There’s no minimum deposit to open a crypto trading account. And the minimum crypto purchase will be $1, Fidelity says. These factors put the company on even footing with most other leading exchanges.
If you don’t have a Fidelity account, making purchases will require you to create and fund an account such as a brokerage or cash management account.
Why you might want to use another exchange
Availability
Fidelity Crypto will initially be available in 35 states. If you can’t access the service in your state, you’ll have to go with another option.
You can still join the waitlist if your state isn’t included, but you won’t be able to use the service unless Fidelity expands its crypto services.
Crypto selection
Fidelity Crypto’s offerings will be on the low end among cryptocurrency platforms reviewed by NerdWallet. Granted, Bitcoin and Ethereum are the two most valuable cryptocurrencies, which means they are widely used and relatively well-established in this emerging sector.
However, cryptocurrency traders often look at more options when they are buying and selling. Crypto.com, another major cryptocurrency exchange, has more than 250 cryptocurrencies for sale. Other brokerages also have more crypto options. Webull, for example, has about 40.
It may turn out that Fidelity follows the path of other brokerages, such as Robinhood, which started with limited crypto offerings, then expanded over time.
It’s not immediately clear whether Fidelity will allow users to trade cryptocurrencies for one another, a function leading competitors generally offer.
Functionality
Fidelity Crypto won’t offer some of the advanced features available on competing exchanges. It will not allow staking, a process that allows owners of some cryptocurrencies to earn rewards similar to interest.
And unlike some other crypto exchanges, Fidelity Crypto will not offer round-the-clock crypto transactions, with trading limited to 4 a.m. to 12 a.m. Eastern time.
Finally, the company says it will not allow customers to transfer cryptocurrency out of their accounts or to external crypto wallets.
Transfers are crucial if you want to do anything with cryptocurrency other than hold it in hopes that it will increase in value. You won’t be able to use crypto purchased through Fidelity on decentalized finance products, for instance.
The bottom line
Though Fidelity’s first stab at a consumer crypto product isn’t the most robust on the market, the firm’s brand name and track record may give some customers a level of comfort moving into a new and risky asset class like crypto. And the company has left the door open to expand its features and capabilities later on.
