Why Fidelity Got Into Bitcoin

Why Did Fidelity Get Into Bitcoin?

Fidelity is one of the largest asset management and brokerages in the U.S. Due to its success and longevity, there was no need for it to explore the digital currency space until the mid-2010s, when investors began to develop an interest in cryptocurrency. In mid-October 2018, Fidelity launched Fidelity Digital Assets, a limited liability corporation designed to serve institutional customers and allow them access to the growing cryptocurrency investing environment.

With this new branch, Fidelity entered into the digital currency game in a big way: Fidelity Digital Assets offers offline cold storage custody solutions, trade execution, and other services. Using its clout as a major financial services firm, Fidelity Digital Assets aims to help to provide financial institutions with full-service digital asset investments. One question likely on the minds of many investors is why exactly Fidelity decided to launch this new company.

Key Takeaways

  • Fidelity launched its initial venture into the cryptocurrency markets in 2018.
  • Fidelity's products are geared towards institutional and accredited investors.
  • Fidelity became the first brokerage to offer exposure to cryptocurrency in retirement accounts in April 2022.
  • Fidelity has a dedicated team that develops investing products focused on digital assets.


Understanding Why Fidelity Got Into Bitcoin

Bitcoin sputtered to a start in 2015, with a price hovering between $230 and $280. By October, the coin's price had risen over $300. More people became interested in the proposition of a digital asset's increasing value, and the cryptocurrency's price began to climb. In early 2017, Bitcoin's price broke through $1,000. Interest surged, and Bitcoin suddenly became the instrument many investors were considering.

Individual investors were buying Bitcoin and seeing 300% returns and more, and institutional investors were chomping at the bit because they could not access the rapidly expanding market. Fidelity, seeing an opportunity to cater to the needs of institutions, decided that the Blockchain Incubator section of its research and development team—the Fidelity Center for Applied Technology (FCAT)—should investigate and find a way to create cryptocurrency investing solutions for institutional investors.

Brokerages like Fidelity are working to provide access to investors because there is interest, the possibility of returns, and money that can be made by delivering digital asset investing services.

Fidelity Crypto Involvement

Fidelity Digital Assets services emerged from the research efforts of the Blockchain Incubator. From 2017 on, the company has increasingly worked to offer new ways for institutional investors to gain exposure to the cryptocurrency market.

Fidelity Digital Assets has sought approval for cryptocurrency-related ETFs and trusts with the Securities and Exchange Commission and developed custody and trading services for accredited investors. It has also pioneered digital assets custodianship for its institutional customers by creating clearing and settlement services, which places assets in cold storage and settles transactions with periodical payments.

Fidelity also provides cryptocurrency educational material geared towards institutional clients to help them become informed and make decisions about using crypto as an asset class.

Moving Forward

Fidelity continues to research and innovate new solutions for institutional and accredited investors. In April 2022, the firm announced that it was pioneering crypto-enhanced 401(k)s for interested employers and their employees, which offer exposure to Bitcoin. The crypto-enhanced retirement accounts will use the custodianship and clearing and settlement services it created for institutional investors. These services provide the institutional-level security and liquidity necessary for retirement funds.

Institutional cryptocurrency investing is growing in popularity. Globally, 52% of accredited investors have digital assets in their portfolios. In Europe, 84% of high-net-worth investors have digital assets in their portfolios.

Fidelity has also taken the lead on investor cryptocurrency and metaverse education by opening the first brokerage to provide a metaverse experience. In Dencentraland, investors can wander through the Fidelity Stack, become familiar with the metaverse, and learn about investing.

By continuing to create innovative cryptocurrency channels and user experiences, Fidelity is positioning itself to be one of the industry's leaders in cryptocurrency and emerging technology. Additionally, it's clear that the brokerage understands that to gain a competitive advantage in the evolving digital asset arena, it needs to find ways to give its main clients the means to invest in it—and to beat its competitors into the digital arena.

Can I Buy Cryptocurrency on Fidelity?

Fidelity does not offer cryptocurrency. If you want to buy cryptocurrency, the best place to look is on a cryptocurrency exchange like Coinbase or BinanceUS.

Does Fidelity Have a Cryptocurrency Fund?

Fidelity does not have a cryptocurrency fund, but it has an exchange-traded fund (ETF) that offers exposure to the cryptocurrency, blockchain, and digital payments industries. It also has a fund that invests in companies involved in the developing metaverse. The funds trade on the Nasdaq with the tickers FDIG and FMET.

What Is the Fidelity Bitcoin Fund?

The Fidelity Advantage Bitcoin ETF and mutual funds use your money to purchase bitcoin for you. The fund then stores them in its off-chain cold storage. The ETF and mutual fund are available on the Toronto stock exchange but are not yet offered to U.S. investors.

Does Fidelity Have Bitcoin?

Fidelity does not have Bitcoin that can be purchased, but it does have some products available that offer exposure to the cryptocurrency market.

Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

Article Sources

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  1. Coinbase. "Bitcoin Price."

  2. Fidelity. "Fidelity Digital Assets: The Journey From Idea to Market."

  3. Fidelity. "Enhancing Institutional Digital Asset Trading With Clearing and Settlement Services."

  4. Fidelity. "Blog."

  5. Fidelity. "Fidelity Investments Advances Leading Position as Digital Assets Provider With Launch of Industry’s First-of-Its-Kind Bitcoin Offering for 401(k) Core Investment Lineup."

  6. Fidelity. "The Institutional Investor Digital Assets Study."

  7. Fidelity. "Fidelity Opens “The Fidelity Stack” in Decentraland; Becomes First Brokerage Firm With Immersive Educational Metaverse Experience."

  8. Fidelity. "Commission-free ETFS Online." Select the New ETFs tab.

  9. Fidelity. "Fidelity Advantage Bitcoin ETF and Mutual Fund."

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