Investment Giants Move Could Send Cryptocurrency Investing Further Into Mainstream If Employers Decide To Offer Option
Fidelitys decision comes a month after the Labor Department expressed concerns about including cryptocurrencies in retirement plans.
Fidelity Investments plans to allow investors to put a bitcoin account in their 401s, the first major retirement-plan provider to do so.
Employees wont be able to start adding cryptocurrencies to their nest eggs right away, but later this year, the 23,000 companies that use Fidelity to administer their retirement plans will have the option to put bitcoin on the menu. The endorsement of the nations largest retirement-plan provider suggests crypto investing is moving further into the mainstream, but it remains to be seen whether employers will embrace it for their workers.
Fidelitys move comes a month after the Labor Department expressed concerns about including cryptocurrencies in retirement plans. It is also an uneasy time for the stock market, with the S& P 500 down almost 10% this year in part due to rising interest rates. Bitcoin is notoriously volatile and has lost more than 40% of its value since its November high.
There is a need for a diverse set of products and investment solutions for our investors, said Dave Gray, head of workplace retirement offerings and platforms at the Boston-based company. We fully expect that cryptocurrency is going to shape the way future generations think about investing for the near term and long term.
Fidelitys embrace of bitcoin could prompt wider acceptance among employers.
Best For Low Fees: Itrustcapital
iTrustCapital is a leading digital asset IRA trading platform that boasts costs as much as 90% lower than other IRA providers. Its transparent pricing includes a 1% crypto trade fee, $50 for gold over spot per ounce and $2.50 for silver over spot per ounce. The platform also charges a $29.95 monthly account fee for services like:
- Setting up a new IRA
- All the necessary tax/IRS reporting
- Unlimited storage with institutional custody partners
- Facilitating contribution, rollover or transfer to fund your IRA
- The iTrustCapital platform support and maintenance
As an iTrustCapital client, you can log into your account and make trades 24/7. All trades execute within 2 minutes and settle within 15 minutes. And if you switch from a different provider, iTrustCapital welcomes you with an In-Kind Transfer you wont have to liquidate your cryptocurrency holdings.
Its specialists will not only guide you through the transfer but also follow up with your previous IRA provider to ensure all assets are transferred.
Retire Early With A Bitcoin Ira
Many young investors are now looking to diversify their retirement accounts by adding Bitcoin and other cryptocurrencies. Theres no doubt that the rise of cryptocurrencies may help you retire sooner, but its volatility could age you along the way. All in all, Bitcoin IRA may be a good last-minute source of tax benefits and hedge against inflation.
Be sure to take into account the speculative nature of Bitcoin, all the rules that govern self-directed IRAs and the dynamic regulations surrounding digital assets.
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How Many Bitcoin Are There
According to Bitcoin’s current code, there cannot be more than 21 million bitcoin in existence. It is highly unlikely this cap will be changed due to Bitcoin’s software code and how the rules are maintained. Of the 21 million that might eventually exist, there are currently a little over 19 million bitcoin already released, and the rate at which new bitcoin are released gets cut in half approximately every 4 years.
In addition, bitcoin is readily divisible, which allows you to buy small pieces of the cryptocurrency. The smallest unit of bitcoin is called a Satoshi or “sat” for short. There are 100 million sats per bitcoin, making bitcoin divisible to 8 decimal placesmore than most traditional currencies. So, if the price of a whole bitcoin were $1 million, each sat would be equivalent to one cent.
Fbtc Etf Review 202: Fidelity Advantage Bitcoin Etf Explained
The Fidelity Advantage Bitcoin ETF recently joined other cryptocurrencies ETFs in Canada that provide investors exposure to Bitcoin, the largest cryptocurrency by market capitalization.
Fidelitys bitcoin ETF was launched on the Toronto Stock Exchange last December, under two tickers: FBTC and FBTC.U, with the latter denominated in US dollars.
In addition to its crypto ETF, Fidelity now also offers a bitcoin mutual fund the Fidelity Advantage Bitcoin ETF Fund.
This FBTC review covers its asset allocation, fees, returns, how it compares to BTCC, and how to buy it in Canada.
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Should You Buy Bitcoin In A 401
Can and should are two very different things.
Your tax-deferred retirement dollars are precious. Given their ability to compound tax-free over time, a dollar in your 401 plan is more valuable than a dollar in a taxable account. You dont want to be reckless with that particular pool of money.
That said, lets say that you believe in cryptocurrencies and that you consider Bitcoin an important long-term piece of your asset allocation. Holding that Bitcoin allocation in your 401 isnt a bad idea.
The tax regime surrounding cryptocurrency is still very much a work in progress, and if youve ever had to report crypto gains or losses on your tax return, youre no doubt well aware of how burdensome the recordkeeping can be. If youre committed to owning Bitcoin, then owning it in a tax-deferred account certainly makes your life easier come tax filing season.
Even then, basic common sense should apply here. Dont buy more Bitcoin than you should simply because you can. You dont want to put your retirement at risk in what is still very much a new asset class.
But if youve determined a prudent amount to own, then holding Bitcoin within your 401 can be a smart way to do it.
Fidelity Will Begin Allowing Investors To Put Bitcoin In Their 401s But Is This Retirement Vehicle The Right Place To Hold Crypto
Fidelity Investments just made a major splash by announcing they will allow trading in Bitcoin in the 401 plans they administer starting midyear.
This makes Fidelity the first major plan provider though almost certainly not the last to allow trading in Bitcoin. News was scant as to whether other major cryptocurrencies such as Ethereum would eventually be allowed in Fidelity 401 accounts. For now, the focus is on Bitcoin.
Fidelity is the largest player in 401 plans by a country mile, with more than $2.4 trillion in plan assets. So, the introduction of Bitcoin into a 401 is a big deal and opens vast new pools of liquidity to investment in the blue-chip cryptocurrency.
But before you start licking your chops, there are a couple questions to consider.
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Fidelity Digital Assets Milestones
Feb 2022 Fidelity International Launches Bitcoin ETP In Europe
Fidelity International has launched its first bitcoin exchange-traded product in Europe in what is the joint-cheapest offering available for investors in the old continent seeking direct exposure to the bitcoin price. The Fidelity Physical Bitcoin ETP will list on the Deutsche Börse Xetra today under the ticker symbol FBTC and on the SIX Swiss Exchange in the coming weeks. It will carry an ongoing charge figure of 0.75%.
March 2021 Asset management giant Fidelity files for Bitcoin ETF
The $4.9 trillion asset manager, has filed paperwork with the SEC, to list a new Bitcoin exchange-traded fund. The ETF aims to track the digital currencys daily performance using the Fidelity Bitcoin Index PR, an index thats derived from several price feeds. If approved, the Trust would be the first Bitcoin ETF to launch in the United States.
Dec 2020 Fidelity Digital to Hold Bitcoin as Collateral for Cash Loans Partnering with cryptocurrency lender BlockFi, Fidelity announces it will allow institutional investors to use bitcoin as collateral for cash loans. This allows bitcoin investors to obtain capital without having to sell their bitcoin, a useful financial tool for hedge funds and cryptocurrency miners, among others.
As Fidelity continues to develop its digital asset investment programs, this page will be updated with cryptocurrency adoption milestones.
Recent Bitcoin Decline Throws Its Value Into Question
Given bitcoin’s recent price volatility, it is hard to know when, if ever, bitcoin would begin to be considered a mainstream investment tool.
Meanwhile, Fidelity’s product is being offered despite recent guidance from the Department of Labor, which regulates 401 plans. The department has cautioned retirement plan managers to be judicious when it comes to cryptocurrencies.
“At this early stage in the history of cryptocurrencies, the Department has serious concerns about the prudence of a fiduciarys decision to expose a 401 plans participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies,” it said in March, before Fidelity announced it was offering bitcoin. “These investments present significant risks and challenges to participants retirement accounts, including significant risks of fraud, theft and loss.”
In an interview with NBC News, Labor Department acting Assistant Secretary Ali Khawar said that not only is bitcoin too new but that the narratives surrounding it have obscured the larger risks associated with it.
In response, Fidelity’s Gray said he agrees with the department’s guidance, though he notes that the company has not banned investing cryptocurrencies outright. He said Fidelity adheres to strict security standards that would meet federal guidelines.
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Why Use This Etf Or Etf Fund Instead Of Buying Cryptocurrency Directly
There are several reasons why you may wish to invest in a Bitcoin ETF or mutual fund, like Fidelity Advantage Bitcoin ETF and Fidelity Advantage Bitcoin ETF Fund, instead of buying cryptocurrency directly.
Fidelity Introduces Bitcoin Etf And Mutual Fund
Canadian investors get new options for fund-based exposure to popular cryptocurrency
Shortly after becoming the first Investment Industry Regulatory Organization of Canada entity to offer a secure and reliable platform for trading in crypto assets, Fidelity Investments has followed through on its announced plans to leverage its new capabilities.
Fidelity has launched the Fidelity Advantage Bitcoin ETF on the TSX with Canadian dollar and U.S. dollar versions trading under the ticker symbols FBTC and FBTC.U, respectively. It has also launched the Fidelity Advantage Bitcoin ETF Fund.
“As bitcoin and digital currencies are gaining recognition among investors, we are pleased to offer a professionally managed bitcoin ETF and ETF Fund supported by the strength and scale of Fidelity,” said Kelly Creelman, senior vice president, Products and Marketing at Fidelity Investments Canada ULC.
After years of research and investment in bitcoin and blockchain, Fidelity has developed a deep understanding of crypto asset technologys benefits, risks, and potential for investors. That put it in position to become the first IIROC dealer to offer a crypto trading and custody solution for institutional investors that includes vaulted cold storage physical, cyber, and operational controls and innovative safeguards across multiple levels.
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Fidelity Investments Will Soon Let Employees Invest Some Of Their Retirement Money In Bitcoin What Could Go Wrong A Lot
Fidelity Investments announced that it will allow employers to offer their employees bitcoin in their workplace retirement plans. It was, in many ways, inevitable, but the timing is problematic, as the U.S. economy may be stumbling into some harder times.
Cryptocurrencies are getting a lot of attention, with celebrity hawkers telling folks they are fools to miss out on this next big thing.
Although fewer than 1 in 5 Americans say they own cryptocurrency, a plurality 43 percent say they think cryptocurrencies will become a dominant economic force in the long term, a Quinnipiac University poll found in March.
You have to give people what they want, right?
But what if they arent ready for what they want?
Fidelity, one of the largest managers of workplace plans, said employers can allow employee contributions in crypto of up to 20 percent per payroll cycle and investors can have up to 20 percent of their total 401 account value in a digital assets account. Employers would set the limit for their plans, so they could reduce the percentage.
Im a skeptic of this speculative investment, even more so given current economic conditions.
The personal saving rate was 6.6 percent in the first quarter, compared with 7.7 percent in the fourth quarter. With an end to pandemic-related relief and rising consumer prices, people are having to dip into their savings or save less.
How To Use Bitcoin
With bitcoin, people can send each other money directly over the internet without involving a third party like a bank or credit card company. This is known as a “peer-to-peer” transaction.
Similar to how some other digital wallet providers like Venmo, PayPal, Cash App, or Zelle enable electronic transfers with traditional currencies, bitcoin transfers can be made online or through a smartphone app on the Bitcoin network. Unlike those other digital wallet providers, Bitcoin is an open system, which can be accessed and used by anyone in the world.
You can also buy bitcoin as an investment. Bitcoin’s price has risen from $0.09 at its founding in 2009 to roughly $29,000 as of mid-May 2022with huge price swings occurring on a frequent basis . Investors need to be sure they can stomach that kind of volatility and risk of loss.
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Fidelity Canada Cryptocurrency Portfolios
While Fidelity Investments Canada ULC is better known for its traditional mutual fund and ETF portfolio , it now also offers exposure to digital currencies.
As of this writing, its crypto offering includes:
- Fidelity Advantage Bitcoin ETF
- Fidelity Advantage Bitcoin ETF Fund
The company is also offering a digital asset trading and custody platform for institutional investors in Canada.
Risks Of Investing In Bitcoin
Some people have been drawn to bitcoin trading as a way to make a quick profit. However, as is the case with most speculative investments, you need to be careful. Buying, selling, and using bitcoin carry numerous risks, including:
When researching and evaluating any investment, it’s important to determine whether it fits with your time horizon, financial circumstances, tolerance for volatility, and risk of loss. If you’re thinking of investing in bitcoin or related opportunities, take the time to get educated about digital assets, be prepared for significant price gyrations, and proceed with caution.
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Crypto Curiosity Remains Strong
Despite bitcoins sharp decline from its November all-time high, the share of adults who were considering purchasing bitcoin held steady at 21% at the end of January, a Morning Consult survey showed.
To owners, bitcoins current price represents just a dip, not a permanent loss of value, wrote Charlotte Principato, financial services analyst at Morning Consult. Bitcoin owners arent in the game because they view cryptocurrency as the future of payments or for other idealistic reasons. Instead, 70% of bitcoin owners say making money is their major reason for investing.
Fidelity estimates about 80 million Americans own or have invested in digital assets, which prompted plan sponsors to address the growing demand, especially among younger workers.
MicroStrategy, whose Chairman and Chief Executive Officer Michael Saylor has been one of bitcoins biggest cheerleaders and has added bitcoin to the companys holdings, will be the first company to offer bitcoin in its retirement plan via Fidelity.
Etn: An Etf Soft Option
For institutional investors, the news might come as a pleasant surprise given the similarities between ETNs and ETFs. With the reticence of the United States Securities and Exchange Commission to approve any Bitcoin ETF filing, the XBT BTC ETN represents a so-called soft option.
According to XBT Provider:
Bitcoin is purchased for money received through the sale of certificates which ensures that the certificates are hedged and structured to follow the price of bitcoin. The certificates are guaranteed by Global Advisors Limited.
Furthermore, the Bitcoin ETN is a security, which means it might likely catch the attention of pension funds and other institutional investors who are mandated by law to have 90 percent of their investments in securities.
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Bitcoin Barely Budged On The News
At the time of writing, Bitcoin was up 1.5% on the news at a trading price of $39,674 per token according to CoinMarketCap.com. The lack of price action in response to this news is a bit surprising as investors tend to “buy the rumor and sell the news.” So in this instance Bitcoiners would load up on this Fidelity announcement now — the “rumor” — and then take profits when Fidelity actually rolls out its Bitcoin investment option — the “news.”
Regardless, offering millions of investors ready access to Bitcoin is a bullish signal for this project.
As a reminder, this is not financial advice and every investor should always do their own research and invest only what they can afford to lose. However, the fact that only 21 million Bitcoin will ever be available — and only 2 million remain unminted — suggests long-term upside for this scarce asset that’s likely to increase in value as access and demand for it increase.