Fidelity To Allow Investments In Crypto Via Individual Retirement Accounts

Fidelity Investments has announced the launch of three major zero-fee retirement plans that will allow US-based investors exposure to Bitcoin (BTC), Ethereum (ETH), and Litecoin (LTC).

Fidelity clients can invest in these assets via individual retirement accounts. The service is available to US citizens who reside in states where Fidelity Digital Assets supports crypto individual retirement arrangements (IRAs).

Fidelity Launches Zero-Fee Retirement Plans

Fidelity launched the new service on Wednesday, allowing investors to get exposure to three major cryptocurrencies: BTC, ETH, and LTC. Investors can access the service in areas where the asset manager offers its crypto trading service by opening a crypto IRA. The firm, the largest provider of 401(k) savings accounts in the US, will also custody the assets with the new service.

All three cryptocurrencies being offered by the new service have been around since the early days of the crypto industry. BTC is the largest cryptocurrency, with a market cap of $1.7 trillion, while ETH, the second-largest cryptocurrency, has a market cap of $228 billion. LTC, which originally set out to be a faster and cheaper version of BTC, has a market cap of $6.4 billion, launching just two years after BTC’s genesis block.

Details Of The Plans

The first plan offered by Fidelity is a tax-free Roth IRA, allowing investors to save for retirement with already taxed money. The second plan is a more traditional IRA, which allows for tax-deferred potential earnings growth. The third plan is a Rollover IRA, enabling investors to transfer funds from a former employer’s plan to an IRA like a 401(k), 403(b), or another IRA. Investors must hold a Fidelity brokerage IRA with the same registration type to open a Fidelity crypto IRA. Users can seamlessly transfer funds from the linked brokerage IRA to the crypto IRA and execute trades. If a user does not have a qualifying Fidelity brokerage IRA, Fidelity will open one when setting up the crypto IRA. Fidelity’s decision to include BTC, ETH, and LTC indicates a focus on more established assets.

Fee Details

According to Fidelity, opening and maintaining a Fidelity crypto IRA and associated custody services for digital assets will not carry a fee for customers. However, Fidelity Digital Assets will apply a 1% spread to buy and sell orders. The spread is the difference between the price a client receives and the price at which the asset is sourced to fulfill the order. The new service allows users to retain several familiar features of traditional Fidelity retirement accounts, including beneficiary management.

Fidelity’s Crypto Offerings

Fidelity has offered crypto services for years. The firm backed EDX Markets, a crypto exchange for institutional investors in 2022, along with Charles Schwab, Citadel Securities, and Paradigm. It also announced the same year that it would allow plan sponsors to add a Digital Assets Account to the plan lineup. Fidelity also received the green light from the Securities and Exchange Commission to launch a Bitcoin ETF. The Fidelity Wise Origin Bitcoin Fund (FBTC) has generated over $11 billion in net inflows, the second-most among all ETFs currently trading. Fidelity also debuted an Ethereum ETF, which has registered over $1.4 billion in net inflows, according to data from Farside.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.