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Fidelity is launching commission-free crypto trades for retail investors

November 3, 2022, 7:41 PM UTC
Exterior of Fidelity Investments building is pictured
Fidelity Investments is launching a new account that will allow retail investors to trade crypto products commission-free.
NurPhoto

While crypto markets have cratered this year, with some coins down more than 50% from their all-time highs at the end of 2021, Fidelity Investments launched two big initiatives that suggest the financial giant doesn’t believe the currency is just a fad.

First, Fidelity announced it’s debuting a new account that will allow retail investors to trade crypto products commission-free.

The platform, Fidelity Crypto, hasn’t officially launched yet, and the brokerage hasn’t announced an official release date yet. But when it does, users will be able to buy, sell, and secure Bitcoin and Ethereum, when maintaining an account balance of at least $1. As of Thursday, interested investors can sign up for the waiting list on Fidelity’s website.

The accounts are separate from other types of brokerage accounts managed by the company.

Fidelity is one of the world’s largest brokerages, managing $9.9 trillion in assets. The company says additional cryptocurrencies may be added as trading opportunities in the future.

While the company is not charging a commission, Fidelity Digital Assets will earn money by collecting a spread of no more than 1%, based on the difference between the price at which investors buy or sell crypto and the price at which it fills the order.

Fidelity follows Robinhood and Binance.US, which already offer commission-free crypto trading. The crypto exchanges are following other markets in the race for the lowest fees: Online brokerages including Fidelity, Charles Schwab, and, of course, Robinhood, now offer zero-commission trading for U.S. stocks.

Still, the timing could be better. The crypto market has plunged in value this year, and trading volumes have decreased significantly, as well.

Fidelity allows some investors to add Bitcoin to their 401(k)s

The news about crypto trades comes at the same time the firm is also beginning to allow some 401(k) plans it administers to invest in Bitcoin and other cryptocurrencies, which Fidelity first announced in April.

The U.S. Department of Labor warned against the practice, saying it “has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins, and crypto assets.”

Newer investments like crypto tend to attract more inexperienced investors “with expectations of high returns and little appreciation of the risks the investments pose.”

Investors should be cautious—both of investing in crypto in a retirement account and trading crypto generally. It is more volatile than a typical stock—as the recent market swings show—and financial advisers say long-term investors should be mindful of how much they’re investing in it.

“I would keep it at a very low upper limit of 1% to 2% of assets at a maximum,” Catherine Valega, a certified financial planner in Boston, previously told Fortune. “These assets can be very volatile, and I’m nervous that employers are setting themselves up for a major headache if investors get too excited and carried away.”

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