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Fidelity Investments Enters the Retail Crypto Trading Space

2 Mins read

Fidelity Investments, a trusted name in the financial industry, has announced its entry into the cryptocurrency trading market. This move puts Fidelity in direct competition with established players such as Coinbase Global and Robinhood Markets.

The retail investors will now have access to Fidelity Crypto, a comprehensive brokerage service that allows buying, selling, and holding of popular cryptocurrencies like Bitcoin and Ether. Fidelity’s platform aims to provide a seamless experience by offering both crypto and traditional investments in one place. The best part? Investors can start with as little as $1 and enjoy fee-free trading.

While an exact date for the wider release of Fidelity’s crypto trading services has not been provided, the company has created an early-access list for interested customers. However, factors like state eligibility may impact waiting times for some users.

According to a Fidelity spokesperson, the company recognizes the growing interest in cryptocurrencies among its customers and aims to support their investment choices. Fidelity believes that where investors choose to invest matters, and it aims to provide them with the necessary tools, education, research, and technology.

This step is not Fidelity’s first foray into the crypto space. The company has been serving institutional clients with digital asset services since 2018 and recently made headlines by allowing corporate clients to include Bitcoin in their 401(k) plans.

With over 34 million customers holding brokerage accounts, Fidelity poses a significant challenge to other regulated crypto brokers and trading platforms operating in the United States. Notable competitors include Robinhood (HOOD), Coinbase (COIN), FTX.US, and Binance.US.

Ryan Coyne, an analyst at Mizuho Securities, explains that while more players are entering the market, the overall pool of potential customers remains limited.

Fidelity’s expansion into retail crypto trading demonstrates its commitment to cater to the evolving needs of investors. By combining its established reputation with innovative offerings, Fidelity aims to make a mark in the fast-paced world of cryptocurrencies.

Robinhood Stock Falls as Fidelity Enters Retail Crypto Market

The stock of Robinhood fell by 3% on Friday, while Coinbase shares experienced a rise of 6%, although gains of nearly 12% at the opening were somewhat reduced. These movements were in response to the impressive quarterly earnings reported by the companies last Thursday. Meanwhile, the S&P 500 saw a minor increase of 0.1%.

The entrance of Fidelity into the retail crypto space is occurring during a volatile period for the industry. Cryptocurrency prices have suffered this year due to the overall decline in the stock market, resulting in a “crypto winter” that has slowed down activity across the sector. As a result, retail traders have become cautious, impacting the revenue of both Robinhood and Coinbase. These companies heavily rely on revenue generated from individual trades.

The recent earnings reports from Robinhood and Coinbase confirmed that trading volumes have remained depressed, with little hope for a significant rebound by year-end.

Looking ahead, Fidelity’s foray into retail crypto, particularly through its fee-free model, is likely to intensify competition within the already price-sensitive industry. Coyne, an industry expert, sees it as “one more step towards the inevitable.”

Coyne explains, “If there are reputable industry players offering zero commission or near-zero commission, it’s only a matter of time before those that overcharge for a commoditized service are forced to lower their prices. Fidelity’s entry into the market adds to the mounting pressure on retail crypto trading pricing.”

Coinbase, which charges retail traders an average fee of 1.3%, is expected to feel the impact the most since its competitors already offer more competitive pricing. Fidelity’s entrance into the market may compel Coinbase to reduce its fees in order to remain competitive, thereby affecting its revenue.

This trend is expected to primarily benefit traders rather than investors.

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