Fidelity Investments is one of the world’s largest multinational financial services companies, managing over $2 trillion USD in assets for its clients. When confronted with new technology, large institutions often have a difficult time adapting to new business landscapes. This is not the case with Fidelity and cryptocurrency. The investment firm spent significant resources early on to research digital assets, and now it’s making bold strides to enter the Bitcoin market. In fact, it has published a comprehensive “Bitcoin primer” on its website. Below is a summary of key milestones of this large institution’s path to cryptocurrency adoption.
May 2015 – Blockchain Incubator formed (Medium)
While Fidelity had been conducting initial research into cryptocurrency since early 2014 (when 1 BTC was worth less than $1,000 USD), the financial institution formed the first team dedicated to exploring blockchain and cryptocurrencies the following year. The Blockchain Incubator paved the way for future adoption of Bitcoin by Fidelity.
Nov 2015 – Bitcoin accepted for donations on Fidelity Charitable (Fidelity.com)
Partnering with Coinbase, a major cryptocurrency exchange, Fidelity took an early step toward Bitcoin adoption by allowing philanthropists to use the digital currency when making donations to Fidelity Charitable organizations. The bitcoins would then be converted to other assets via Coinbase and given over to the respective charity.
Apr 2017 – Joined top universities and tech firms for IC3 initiative (Fidelity.com)
In a first venture of its kind, Fidelity joined with top universities and tech firms to explore new blockchain projects. All of the institutions taking part in the Initiative for Cryptocurrencies and Contracts share a common vision for the disruptive potential of blockchain tech. The CEO of Fidelity also spoke at Consensus 2017 in May.
Aug 2017 – Digital asset wallet tested on Fidelity.com (Fidelity.com)
Partnering with Coinbase, Fidelity allowed customers to authorize the cryptocurrency exchange to send digital wallet data to their Fidelity Portfolio Summary View. While this feature is only a simple window into one’s digital assets elsewhere, it signaled a willingness to treat digital assets on a level playing field with other investment types.
May 2018 – Partnership with MIT for Layer 2 Summit (Forbes)
Continuing a multi-year focus on blockchain research, a summit was convened at Fidelity Labs and MIT Media Labs. This summit addressed an issue that concerns many blockchain professionals: scalability. For blockchain to scale, cost per transaction needs to go down as transaction volume increases. With current tech, the opposite is true.
Oct 2018 – Platform for institutional investors launched (BitIRA Blog)
The fifth-largest asset manager in the world launched Fidelity Digital Assets, which is set to go live in early 2019. This marks the most ambitious venture into the crypto space by any major financial institution, and this digital assets division will allow institutional investors to buy cryptocurrency through a regulated and trusted custodian.
Jan 2019 – Fidelity Digital Assets platform being tested with eligible clients (Medium)
Issuing a public update on their cryptocurrency trading platform for institutional investors, Fidelity said that some select clients have begun using the service. Despite the relative novelty of cryptocurrency, Fidelity has “established a robust set of technical and operational standards” that are being updated based on initial feedback from users.
Mar 2019 – Fidelity Digital Assets goes live (CoinTelegraph)
On March 8, Fidelity announced that its cryptocurrency platform has gone live with a select group of clients. The roll out is occurring slowly and relatively quietly for now as the concept gains popularity. Fidelity’s “solutions are focused on the needs of hedge funds, family offices, pensions, endowments, and other institutional investors”.
May 2019 – Fidelity research predicts a growing market for Bitcoin (CCN)
A research paper by Fidelity Digital Assets concluded that institutional investment in cryptocurrency is likely to increase over the next five years. The survey of 450 institutions showed that 22% already own digital assets and 74% of financial advisors view cryptocurrency most favorably. The value of BTC rose by over 25% in April 2019 alone.
As Fidelity continues to develop its digital asset investment programs, this page will be updated with cryptocurrency adoption milestones.
Last Updated: March 2019
Timeline of Fidelity’s Path to Adoption of Cryptocurrencies
1. Does Fidelity accept bitcoin?
As of October 2018, Fidelity only accepts bitcoin (and ether) for donations to Fidelity Charitable. This may change in early 2019 (see below).
2. Does Fidelity sell bitcoin?
Fidelity does not currently sell bitcoin or other cryptocurrencies. This may change in early 2019 (see below).
3. Can I trade bitcoin with Fidelity?
Fidelity currently does not allow for bitcoin trading. Nevertheless, Fidelity customers who also purchase cryptocurrency with Coinbase can keep track of the value of their digital assets using Fidelity’s Portfolio Summary View. Furthermore, in early 2019, Fidelity is planning to go live with Fidelity Digital Assets, a platform for institutional investors that will allow them to trade cryptocurrencies.
4. Can I rollover my Fidelity 401(k) to bitcoin?
While Fidelity does not currently offer the option to purchase bitcoin, other companies do allow you to rollover your eligible Fidelity 401(k) accounts into a Digital IRA. This type of retirement account allows for tax-deferred investments in cryptocurrency (a major advantage considering how cryptocurrency transactions are currently taxed).
5. Can I buy bitcoin for an IRA with Fidelity?
Unfortunately the answer to this question is the same as the situation described for a 401(k). If you want to open a Bitcoin IRA, Fidelity does not currently allow individuals to purchase any cryptocurrency directly. However, the same solution as explained in the above can apply. You can move an existing IRA with Fidelity to a Bitcoin IRA and get the same tax benefits as you would for any other investment within an IRA. There are no tax penalties or implications to do so.