Fidelity Crypto Launch Could Benefit from Banking Turmoil

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Fidelity Investments launched its crypto trading service to retail customers in 36 U.S. states earlier this month, and the timing could help the brokerage benefit from recent bank turmoil.

Key Takeaways

  • Fidelity rolled out its crypto trading and custody services to retail clients earlier this month.
  • The launch could fill the vacuum created by the failure of crypto-friendly banks like Signature.
  • U.S. investors in one of Fidelity’s 36 states can apply, but there is currently a waitlist.

The Fidelity Crypto platform was previously only available to institutions. Individual investors can now buy and sell bitcoin and ethereum and use custodial services provided by Fidelity Digital Assets.

Users are not yet able to transfer their assets to the platform, although the company is working on possibly rolling out that option later in the year. Traders will also be able to use their assets as collateral to borrow from third-party lenders.

Fidelity’s Timing Could Be Beneficial

Fidelity crypto’s full launch may prove to be well-timed. High and persistent inflation restored some investor confidence in cryptocurrencies earlier this month, briefly pushing bitcoin prices above $26,000.

Fidelity’s trading platform also allows users to “buy and sell bitcoin and ethereum in the same app” as products like stocks. More crypto institutions could turn to this type of platform that bridges the new world of crypto with the security of a trusted name from the traditional finance world.

That’s a huge benefit for customers, especially in the wake of increased regulatory scrutiny for crypto platforms and the collapse of crypto-lenders such as Silvergate Capital and Signature Bank. Bloomberg reported this week crypto firms have been turning to companies like Fidelity to invest money in safe and liquid products such as U.S. Treasuries.

Fidelity has been active in crypto since 2014 and the company launched its own Fidelity Advantage Bitcoin ETF (FBTG) in 2021. The fund had net assets of $50 million as of March 15. The firm expanded its ETF offerings with four new products in April 2022, which included a Digital Payments (FDIG) and Metaverse (FMET) offering.

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