Fidelity Prepares Bitcoin Retail Trade, Ether Trades Without Commissions But Fees

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Fidelity Investments is preparing to offer bitcoin and ether trading to retail investors, according to the company’s website, which touts the upcoming service as commission-free, but there’s a catch: A 1% fee will be added to each transaction.

The company calls the fee a spread and defines it as “the difference between your execution price and the price at which Fidelity Digital Assets executes your order.” While the 100 basis point spread is a slim catch for conventional retail investment transactions, it is costly in the digital world, where the weighted average commission for a cryptocurrency trade is just 12 basis points.

“Free commissions are a nifty way to stand out in a crowded field while making a bundle via spreads,” says Javier Paz, chief data and analytics officer for Forbes Digital Assets. “The free commission sends a good feeling to traders to think they’re getting a deal, but only the savvy ones realize it’s not a free lunch.”

In response to Forbes’ requesting comment, a company spokesperson pointed to an earlier statement: “Where our clients invest matters more than ever. A significant portion of Fidelity customers are already interested in and own crypto. We provide them with tools to support their choice, so they can benefit from Fidelity education, research and technology.

The website did not identify a start date for the crypto offering. He said invitations to access the service will be sent based on factors such as time of registration and state eligibility.

Last week, Fidelity Digital Assets, the company’s crypto arm, launched ether trading for institutional clients.

Cryptocurrency exchanges are engaged in a price war, triggered by Binance.US’ decision in August to eliminate fees on bitcoin trading. The commission-free model, popularized by stock and crypto trading app Robinhood at the start of the coronavirus pandemic, has proven useful in winning business from more established competitors.

However, this has yet to result in a significant boost for Binance. Meanwhile, Coinbase COO Emilie Choi said in September, the country’s largest crypto exchange by volume does not plan to reduce its retail trading fees to zero. “There are a bunch of problems with zero fees,” Choi said. “Wash trading and so on. We will continue to play our own game.”

In addition to cryptocurrency trading, Fidelity also offers an Ether index fund, which tracks the performance of the coin in US dollars, as well as an exchange-traded fund (ETF) focused on metaverse investments and another for payments. crypto and digital. In April, Fidelity said it would allow employers to offer their employees access to bitcoin through an investment option in their major 401(k) retirement plans.

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