Fidelity's Bitcoin Investment Trust Fund: Invest With Confidence

Fidelity is one of the largest asset managers and brokerages in the U.S. and has been an innovator in the crypto space since 2014. In 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.

Fidelity offers its customers what it describes as “commission-free” crypto trading with the ability to trade and secure crypto like bitcoin and ethereum for as little as $1. However, it is important to note that the company takes a spread of up to 1% on crypto trades.

Fidelity has a dedicated team that develops investing products focused on digital assets, including the Fidelity Wise Origin Bitcoin Fund, an ETF that was approved by the SEC in January 2024. The fund seeks to track the performance of bitcoin passively and holds 100% bitcoin.

Fidelity's products are geared towards institutional and accredited investors, and the company continues to research and innovate new solutions in the digital assets space.

Fidelity's history with Bitcoin

Fidelity is one of the largest asset managers and brokerages in the U.S. Due to its success and longevity, it had no need to explore the digital currency space until the mid-2010s when investors began to develop an interest in cryptocurrency. In 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. This new branch offered offline cold storage custody solutions, trade execution, and other services.

Fidelity's interest in Bitcoin began in 2015 when the cryptocurrency's price rose above $300. As more people became interested in the proposition of a digital asset's increasing value, the price of Bitcoin continued to climb. In early 2017, Bitcoin's price broke through $1,000, and interest surged. Individual investors were buying Bitcoin and seeing large returns, but institutional investors were unable to access the rapidly expanding market.

Seeing an opportunity to cater to the needs of institutions, Fidelity 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. 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, placing assets in cold storage, and settling transactions with periodical payments.

In April 2022, Fidelity became the first brokerage to offer exposure to cryptocurrency in retirement accounts. The company also manages the Fidelity Wise Origin Bitcoin Fund, an ETF approved by the SEC in January 2024. Fidelity continues to research and innovate new solutions for institutional and accredited investors, and it has taken the lead on investor cryptocurrency and metaverse education.

Fidelity Digital Assets

Fidelity Crypto is offered by Fidelity Digital Assets and is available to US citizens residing in eligible states. It is important to note that crypto is considered a high-risk investment and may not be suitable for all investors.

Buying crypto ETPs or crypto-related ETFs

Crypto exchange-traded funds (ETFs) are a developing asset class that tracks the price performance of cryptocurrencies by investing in a portfolio linked to their instruments. Crypto ETFs trade on regular stock exchanges, and investors can hold them in their standard brokerage accounts.

Crypto ETFs are a good option for investors who want exposure to crypto without the additional ownership expenses or the risk of owning and holding digital assets in a crypto wallet. They also lower the learning curve for investors who are unfamiliar with the technological jargon and networking complexities of cryptocurrencies. Crypto ETFs are also more secure, as individual investors may struggle with the cybersecurity measures required to protect their assets.

However, crypto ETFs do not always duplicate the price moves of the underlying digital token, especially if they depend on futures contracts to track cryptocurrencies. They also have higher fees than other ETFs, and while the funds are regulated, there is no oversight in the crypto markets where the funds are invested.

Fidelity offers several crypto-related ETFs, including:

• Fidelity® Crypto Industry and Digital Payments ETF (FDIG)
• Fidelity® Metaverse ETF (FMET)

Fidelity also offers two spot crypto exchange-traded products (ETPs):

• Fidelity® Wise Origin® Bitcoin Fund (FBTC)
• Fidelity® Ethereum Fund (FETH)

These spot crypto ETPs are not investment companies registered under the Investment Company Act of 1940 and are not regulated under the Commodity Exchange Act of 1936. As a result, shareholders do not have the same protections as those investing in registered investment companies.

While these spot crypto ETPs do not give direct ownership of Bitcoin, they make investing in Bitcoin more accessible to the general public. They also have fewer security considerations as investors only need to protect the login to their financial platform. However, it is important to remember that spot crypto ETPs are still exposed to the underlying security risks of Bitcoin, and investors do not have direct access to its decentralised and anonymous features.

Overall, crypto ETFs and ETPs provide a way for investors to gain exposure to crypto assets without the complexities and risks of direct ownership. However, it is important to carefully consider the pros and cons before investing in these products.

Buying crypto stocks

There are many ways to buy crypto stocks, and it can be done through various online platforms and exchanges. Here is a step-by-step guide on how to get started:

• Choose a Crypto Exchange or Platform: Select a reputable and secure crypto exchange or platform that suits your needs, such as Coinbase, Kraken, or Gemini. These platforms offer a user-friendly interface, a wide variety of cryptocurrencies, and additional features like crypto savings accounts or trading capabilities.
• Create an Account: Sign up and create an account on your chosen platform. This usually involves providing personal information and verifying your identity. Some platforms may also require you to complete a Know Your Customer (KYC) process.
• Fund Your Account: Most platforms allow you to fund your account by linking your bank account or credit card. You can transfer funds from your bank to purchase the desired cryptocurrency. Credit card purchases typically incur higher fees.
• Place Your Order: Once your account is funded, you can place an order for the cryptocurrency you want to invest in. You can enter the amount of USD or the desired amount of the cryptocurrency, and the platform will handle the conversion.
• Store Your Cryptocurrency: After purchasing, your cryptocurrency will be stored in a digital wallet. Most exchanges provide their own integrated wallets, or you can choose to use a standalone wallet like Electrum.org or a hardware wallet like LedgerWallet.com.
• Trading and Investing: With your cryptocurrency in your wallet, you can now trade or invest. Trading platforms on exchanges allow you to buy, sell, or exchange cryptocurrencies. Remember that investing in cryptocurrencies is considered high-risk due to their volatility and regulatory environment.

It is important to note that some platforms may have specific requirements or limitations, such as the number of supported cryptocurrencies or geographic availability. Always review the fees, security measures, and customer support offered by the platform before committing to it. Additionally, ensure that you understand the tax implications of buying, selling, or trading cryptocurrencies, as they are typically treated as capital assets.

Fidelity and Crypto Investments:

Fidelity, one of the largest asset managers and brokerages in the US, offers various options for investing in cryptocurrencies like Bitcoin. Here's an overview:

• Fidelity Crypto Accounts: Fidelity allows you to trade crypto directly through Fidelity Crypto®. You can buy and sell crypto like Bitcoin and Ethereum starting with as little as $1. Fidelity Crypto® accounts provide institution-level security and are available on their website and mobile app.
• Fidelity Crypto Funds: Fidelity offers two crypto funds – the Fidelity® Wise Origin® Bitcoin Fund (FBTC) and the Fidelity® Ethereum Fund (FETH). These funds allow you to add exposure to Bitcoin and Ether in brokerage, trust, and IRA accounts. FBTC and FETH are highly volatile and intended for investors with a high-risk tolerance.
• Exchange-Traded Funds (ETFs): Fidelity provides ETFs that offer exposure to companies involved in the cryptocurrency and digital payments spaces, such as Coinbase, Riot, Marathon Digital Holdings, and Galaxy Digital Holdings. Their Metaverse ETF (FMET) invests in companies involved in the anticipated combination of virtual and physical existences, including well-known technology companies.
• Crypto Education: Fidelity emphasizes education and provides resources to help investors make informed decisions about crypto investments. They offer newsletters, articles, podcasts, webinars, and on-demand educational content to enhance investors' knowledge about cryptocurrencies.

Fidelity has been an innovator in the crypto space since 2014 and continues to expand its offerings to meet the evolving needs of investors interested in digital assets. Their products and services cater to both individual and institutional investors, making them a comprehensive platform for those looking to invest in cryptocurrencies.

Crypto trading with Fidelity

Fidelity Crypto accounts allow you to trade and secure crypto like Bitcoin and Ethereum for as little as $1. You get institution-level security and services that Fidelity Digital Assets has offered since 2018.

To start trading, you need to open a Fidelity Crypto account, which takes just a few minutes. You also need to open an eligible Fidelity brokerage account to fund your new crypto account. You can then place market or limit orders for as little as $1.

Fidelity Crypto is only available to US citizens over the age of 18 who reside in a state where Fidelity Digital Assets serves customers.

Fidelity also offers two crypto funds—one for Bitcoin and one for Ether—allowing you to add exposure to crypto in brokerage, trust, and IRA accounts. These funds are highly volatile and are for investors with a high-risk tolerance.

Fidelity also provides educational resources to help investors make informed decisions about using crypto as an asset class.

Frequently asked questions