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Fidelity Investment Customers can Now Buy Bitcoin

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Fidelity Investment
Fidelity Investment

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Fidelity Investments has opened up the buying and selling of Bitcoin & Ether to individual customers after providing the services exclusively for institutions and waitlisted customers for a while.

Fidelity Opens Up Bitcoin Trading To Public

Investors can now trade the two biggest cryptocurrencies on the platform in addition to taking advantage of the custodial services provided by Fidelity Digital Assets. Fidelity customers, however, cannot transfer their cryptocurrencies to self-custodial wallets, protected by private keys. Instead, cryptocurrencies can only be exchanged on the platform.

The company did announce that it’ll be looking into cryptocurrencies transfer in November last year, during the launch of the waitlist. But as of now, there’s no roadmap from the company that could provide insight into the matter.

The inability to move assets or to take direct custody of their holdings, for investors, means that Fidelity will hold the custody of the assets. This can be concerning for investors who’ve witnessed multiple bankruptcies among crypto exchanges over the years, such as the latest FTX fiasco.

Investors prefer to have complete control over their assets and trusting intermediaries such as Fidelity might take some time. Although, the size and reputation of the company should be of comfort for investors.

Fidelity has also adopted commission-free trading, where users won’t be paying a “fee” for cryptocurrency transactions, similar to other exchanges such as Binance & Robinhood. But the company will be charging a 1% spread on every transaction.

The company defines this spread as “the difference between the price at which you buy or sell crypto in your Fidelity Crypto account and the price at which Fidelity Digital Assets fills your order.” And it will be visible in the execution price of the client.

Trading is open only to US citizens above the age of 18, who reside in states where Fidelity Digital offers its services.

The company’s move from traditional markets has invited some criticism, where a group of senators have stated that “Fidelity Investments has opted to expand beyond traditional finance and delve into the highly unstable and increasingly risky digital asset market.” But Fidelity doesn’t seem much affected by the criticism.

US Banks Shy Away From Crypto Banks As Regulatory Pressure Rises

This move comes at a time when the regulatory pressure in the cryptocurrency industry has been constantly rising. At the same time, there has been a collapse of multiple high-profile firms over the last year.

Not just that, large and small banks in the US are refusing to engage with cryptocurrencies, at a time when the industry could appreciate all the support it gets. Two of the largest crypto-friendly banks, Silvergate and Signature and the Silicon Valley Bank had a closure a week back.

Many cryptocurrency-based companies and start-ups are finding it increasingly difficult to partner with banks. At a time when major banks in the US have lost about $200 billion in a week, and banks who were previously okay with onboarding crypto clients are now refusing collaborations.

The skepticism for crypto among major banks is a result of increasing regulatory pressure for crypto, especially from the Securities and Exchange Commission (SEC), which has made it mandatory for crypto entities to register with the commission. And not doing so will result in strict action from the SEC.

Many crypto companies were targeted by the SEC, and even brought under, after the collapse of the FTX exchange late last year. Following the criminal indictment of the firm’s CEO, Sam Bankman-Fried, major institutions including the Treasury, Federal Reserve and FDIC have warned banks about the risks associated with partnering with the cryptocurrency industry.

This has caused banks to back off from deals made with crypto companies just a few months ago, and Evolve Bank & Trust and Metropolitan Bank are a couple of names on the list. Other US banks, such as ProvBank, Western Alliance, and Bridge Bank still continue to offer their services to struggling crypto companies.

Amidst this, the Fidelity service “provides both the credibility that crypto has needed and the opportunity for investors, most of whom rely on their financial advisors for investment strategies,” says Ric Edelman, a financial advisor & American author.

Fidelity will also provide the Fidelity Index Fund which will track the performance of coins in US dollars, in addition to cryptocurrency trading services. The company has also filed trademark applications for providing NFT and metaverse investment services in December last year.

Bitcoin Continues To Rise Amidst The Second Biggest Banking Collapse

In a recent interview, Nassim Taleb reiterated his argument that Bitcoin cannot function as a currency or store of value and claimed that it will ultimately collapse. However, his assertion isn’t entirely valid. Bitcoin has experienced significant drops in value over the past decade, including a 58% decrease in 2022, but its average annual return from 2010 to 2021 was a remarkable 1,576%.

The development of a thriving global network of miners and over a million active addresses has contributed to the emergence of a crypto economy worth more than $1 trillion, including utility tokens and NFTs.

Despite bans, frauds, scams, and other counterproductive events, bitcoin and its user base have demonstrated adaptability and resilience, resulting in the continued success of the cryptocurrency.

Bitcoin’s genesis block message from fourteen years ago warned of the Chancellor’s second bailout for banks. Today, we have witnessed the repercussions of the second-largest banking collapse in US history. This makes a case for the need to embrace Bitcoin technology to create an efficient financial system.

Investors who’ve followed bitcoin for years believe the foundation for the token and thus the token continues to see a constant uprise in an environment that is concerning for banks. Fidelity opening up its services will further add to the adoption of cryptocurrency.

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