Fidelity now offers a tax-advantaged way to leverage crypto assets while saving for one’s retirement.
Fidelity Investments, an asset manager with almost $6 trillion under its supervision, has launched new crypto-focused retirement accounts that enable investing in Bitcoin, Ethereum and Litecoin with minimal fees.
The firm offers three different ways to use crypto as a financial stability guarantee for one’s retirement period. Fidelity Crypto IRAs include Roth, Traditional and Rollover accounts.
In the first case, your potential gains will be tax-free, while the two latter accounts offer tax-deferred gains. Besides, Fidelity charges no fees to open or maintain the accounts, only a 1% spread on the execution price of crypto buy and sell transactions.
There are a few methods to invest in crypto with Fidelity retirement offerings. First, you can leverage the firm’s brokerage accounts, including an IRA, to invest in Fidelity’s mutual funds that focus on cryptocurrencies like Fidelity Wise Origin Bitcoin Fund (FBTC) or Fidelity Ethereum Fund (FETH). Besides that, investors can link an eligible corresponding brokerage IRA to their crypto counterpart to act as a funding account.
Although buying cryptocurrencies directly in an IRA has never been explicitly banned, most IRA providers have not permitted such transactions, so Fidelity’s new offerings stand out among similar investment options. Moreover, according to a recent survey by Bitwise and VettaFi, although 96% of advisors have received crypto-related inquiries from their customers, only 14% incorporated crypto into client portfolios, often with a limited allocation due to the high volatility of digital assets.
The new investment options are available exclusively to U.S. citizens who reside in states where Fidelity Digital Assets can serve customers, except for California and Oregon.
All cryptocurrency-related services offered by Fidelity are managed by its dedicated subsidiary – Fidelity Digital Assets. Established in 2018, the financial firm’s subdivision initially focused on institutional-grade services, including custody solutions and a trading platform, for digital assets like Bitcoin and Ethereum.
In 2024, Fidelity expanded its digital asset services to retail investors through Fidelity Crypto. Crypto trading for individuals is available via the Fidelity Investments app. Both the owners of separate and joint brokerage accounts can participate in buying and selling Bitcoin, Ethereum and Litecoin on the platform.
Traditional individual retirement accounts (IRAs) have been one of the most popular ways to save toward retirement with the benefit of tax advantages since the 1970s. Bitcoin IRAs or crypto IRAs have appeared on the market just recently, though they are still marketed as products for investors with high-risk tolerance due to the crypto market’s inherent volatility.
At the same time, diversifying one’s retirement portfolio with alternative asset classes that have a lower correlation to traditional stocks and bonds might be seen as advantageous in periods of economic uncertainty as the one we’re observing today. Besides, historically, Bitcoin investors received the most gains in a long-term holding scenario, which is characteristic of retirement accounts as well.
Therefore, the combination of two popular investment tools – a traditional IRA and an innovative Bitcoin – can help retirement planners reap the financial benefits offered by both legacy and breakthrough worlds.
