Fidelity Crypto: Pros, Cons and How it Compares
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When Fidelity Investments rolled out its crypto service in 2021, it introduced digital assets for the first time to the company's approximately 40 million individual clients.
Crypto isn't for everyone — it's risky, volatile and can be hard to navigate. Fidelity's product has simplified the process, largely by starting investors with just a few crypto options.
Fidelity Crypto could be appealing for investors who are curious about cryptocurrency and already know and trust Fidelity with their investments.
But if you’re already an advanced 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 are not yet up to par.
For instance, Fidelity offers only three cryptocurrencies: Bitcoin, Ethereum and Litecoin. And users can't send or receive cryptocurrency from their accounts, a must for investors who want to use crypto for payments or to access blockchain-based services on the web. Fidelity does say this feature is on their roadmap, but has not given a specific timeframe for when it may be implemented. You can sell crypto for fiat money, though.
» Learn more: Read our review of Fidelity's brokerage.
Why you might want to sign up
Here are a few factors to consider as you evaluate Fidelity's crypto offerings.
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 takes 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, has a confusing fee structure that may result in fees anywhere between 1% and 4%, depending on the method of payment.
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 is $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 is initially available 38 states. If you can’t access the service in your state, you’ll have to go with another option.
Crypto selection
Fidelity Crypto’s offerings are on the low end among cryptocurrency platforms reviewed by NerdWallet. Granted, Bitcoin and Ethereum are the two most valuable cryptocurrencies (and Litecoin is one of the original altcoins), 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 350 cryptocurrencies for sale. Other brokerages also have more crypto options.
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.
Functionality
Fidelity Crypto does not offer some of the advanced features available on competing exchanges. It doesn't allow staking, a process that allows owners of some cryptocurrencies to earn rewards similar to interest. And while you can now trade Bitcoin, Ethereum and Litecoin nearly 24/7, there's still a one-hour window between 12 a.m. and 1 a.m. Eastern during which you can't place trades.
Finally, the company says it does 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 decentralized 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.
About Fidelity Crypto:
