Does Fidelity Charge Fees for Crypto Trading?

If you're looking to trade cryptocurrency on a platform that charges no commissions, Fidelity might not be your first choice. However, Fidelity Investments has been a stronghold for traditional investment vehicles like stocks, mutual funds, and bonds. Recently, it has begun expanding into the digital currency space by offering cryptocurrency services. While Fidelity itself doesn't currently allow direct cryptocurrency trading on its main brokerage platform, it has a subsidiary, Fidelity Digital Assets, which provides cryptocurrency services to institutional investors.

For individual retail investors, Fidelity's crypto services are not as fully developed as other platforms like Coinbase or Binance. You won’t be able to directly trade Bitcoin or Ethereum on their primary retail trading interface. This fact can come as a surprise to investors who have become used to Fidelity's all-encompassing financial services, from trading stocks to managing retirement accounts. Instead, the company offers a more hands-off approach by allowing exposure to crypto-related investments through ETFs or crypto-related stocks.

Now, to answer the million-dollar question: Does Fidelity charge fees for crypto trading?

1. Institutional Services via Fidelity Digital Assets
   Fidelity Digital Assets, launched in 2018, focuses on institutional investors. Its services include cryptocurrency custody and trade execution. Here, institutions can buy and sell digital assets like Bitcoin through over-the-counter (OTC) desks. The fee structure for these services is generally customized based on trading volume and the specific needs of the institutional client. Unfortunately, these details are not publicized as openly as retail fees. However, it’s known that fees are usually split into tiers based on volume, with larger volumes benefitting from lower fees.

2. Crypto-Related ETFs and Stocks
   For retail investors, Fidelity allows indirect exposure to cryptocurrencies through exchange-traded funds (ETFs) and cryptocurrency-related stocks. Trading these assets comes with Fidelity's standard trading fees, which are generally competitive at $0 for stock and ETF trades. However, expense ratios for the ETFs will apply, which can vary depending on the specific fund.

3. Fidelity Crypto Account via Partner Platform
   In 2022, Fidelity made headlines by offering a 401(k) retirement plan option that includes exposure to Bitcoin, making it the first large U.S. provider to do so. However, these crypto holdings are facilitated through third-party platforms that specialize in digital assets. Fees for these services can be layered, and include both the platform fees and any underlying transaction costs associated with crypto buying or selling. Fidelity itself may not directly charge crypto-specific fees, but you could end up paying fees from the platform handling the trades.

4. Comparison with Competitors
   When comparing Fidelity's offerings to those of competitors like Coinbase, Binance, or Kraken, it’s important to note that most of these platforms operate on a per-transaction fee model. Coinbase, for example, charges a flat fee or percentage for trades, typically around 1.49% for standard transactions. Binance operates on a lower-fee model, usually charging less than 0.1% for trades. Fidelity, through its Digital Assets service, offers a more traditional financial institution approach with more opaque, potentially higher fees for institutional players.

5. Crypto Custody
   One of Fidelity’s major strengths in the crypto space is its focus on crypto custody. Crypto custody refers to securely holding digital assets on behalf of clients. The fees for crypto custody services typically depend on the amount being stored and the duration. In general, you can expect these fees to be tiered, with higher amounts of stored assets resulting in a lower fee percentage. Fidelity’s custody service is particularly appealing for institutions that require a high degree of security and compliance with regulatory standards.

What This Means for You:

If you're an individual retail investor interested in gaining exposure to cryptocurrency through Fidelity, you won’t directly trade crypto on its main platform anytime soon. Instead, you’ll be directed toward crypto-related ETFs or stocks, which carry the same trading fees as other Fidelity investments. However, if you're part of an institution or a company with a retirement plan managed by Fidelity, there’s a growing chance you’ll see Bitcoin offered as part of your retirement options, although it will come with its own fees from third-party providers.

In contrast, if you want to trade cryptocurrency directly with low fees, your best option would likely be to use a dedicated crypto exchange like Binance, Kraken, or even Robinhood. Each of these platforms has its own fee structure, but they offer a more direct and transparent experience for individual traders.

Given this landscape, Fidelity isn’t necessarily your best bet for low-fee crypto trading, but it does offer robust options for institutional investors and those interested in indirect crypto exposure through ETFs and retirement plans.

So, what’s the bottom line? Fidelity's approach to cryptocurrency trading is less straightforward than that of dedicated crypto exchanges. While it doesn’t offer direct retail crypto trading with low fees, it is increasingly offering ways to gain crypto exposure in more traditional investment vehicles like ETFs and retirement accounts. For institutional investors, Fidelity Digital Assets offers a highly secure, if slightly more expensive, avenue for crypto investing, complete with customized fee structures and top-tier custody services.

In a world where direct access to cryptocurrencies is becoming increasingly democratized, Fidelity's more cautious, institutional approach stands out as a sign that crypto is gradually being integrated into traditional finance—but with traditional finance's associated costs.