A Comprehensive Guide on How to Buy Cryptocurrency through Fidelity

Introduction:

In recent years, cryptocurrencies have gained immense popularity as a digital asset class. Fidelity, a well-known brokerage firm, offers a platform for investors to buy and sell various cryptocurrencies. This article provides a detailed guide on how to buy cryptocurrency through Fidelity, including the necessary steps and considerations.

1. Creating a Fidelity Account:

To begin buying cryptocurrency through Fidelity, you need to create a Fidelity account. Follow these steps to create an account:

a. Visit the Fidelity website or download the Fidelity app.

b. Click on "Open an Account" or "Register."

c. Fill in the required personal information, including your name, address, and Social Security number.

d. Choose an account type, such as an individual, joint, or trust account.

e. Verify your identity by providing additional information or documents.

f. Agree to the terms and conditions.

g. Fund your account by linking a bank account or credit/debit card.

2. Navigating the Fidelity Platform:

Once your account is created and funded, you can start buying cryptocurrency. Here's how to navigate the Fidelity platform:

a. Log in to your Fidelity account.

b. Click on "Trade" or "Invest" from the menu.

c. Select "Crypto" from the available asset classes.

d. You will see a list of cryptocurrencies available for purchase. Click on the one you want to buy.

e. Enter the amount of cryptocurrency you wish to buy in the "Buy" field.

f. Choose your funding source from the available options (bank account, credit/debit card, or another investment account).

g. Review the transaction details and confirm your purchase.

3. Understanding Cryptocurrency Fees:

When buying cryptocurrency through Fidelity, it's important to understand the associated fees. Here are the key fees to consider:

a. Deposit fees: Fidelity charges a fee for depositing funds into your account using a bank account or credit/debit card.

b. Trade fees: Fidelity charges a flat fee per trade, which may vary depending on the cryptocurrency.

c. Withdrawal fees: Fidelity may charge a fee for withdrawing cryptocurrency from your account to an external wallet.

4. Storing Cryptocurrency:

After purchasing cryptocurrency through Fidelity, you have the option to store it in your Fidelity account or transfer it to an external wallet. Here are the key considerations:

a. Fidelity wallet: Fidelity offers a secure digital wallet within its platform, allowing you to store your cryptocurrency.

b. External wallet: If you prefer more control over your cryptocurrency, you can transfer it to an external wallet. There are various types of wallets available, including software wallets, hardware wallets, and paper wallets.

c. Security: It's crucial to choose a secure wallet and take appropriate measures to protect your private keys and cryptocurrency.

5. Tax Implications:

When buying cryptocurrency through Fidelity, it's important to understand the tax implications. Here are the key considerations:

a. Capital gains tax: If you sell your cryptocurrency for a profit, you may be subject to capital gains tax.

b. Tax reporting: You must report your cryptocurrency transactions to the IRS using Form 8949 and Schedule D.

c. Tax planning: Consult with a tax professional to understand your specific tax obligations and strategies.

Frequently Asked Questions:

Q1: Can I buy cryptocurrency through Fidelity with a credit/debit card?

A1: Yes, you can use a credit/debit card to fund your Fidelity account and purchase cryptocurrency. However, there may be additional fees associated with using a credit/debit card.

Q2: How long does it take to receive cryptocurrency after purchasing it through Fidelity?

A2: The time it takes to receive cryptocurrency after purchasing it through Fidelity varies. Generally, it takes a few minutes to a few hours for the transaction to be processed and the cryptocurrency to be available in your account.

Q3: Can I sell cryptocurrency through Fidelity?

A3: Yes, you can sell cryptocurrency through Fidelity. Simply navigate to the "Trade" or "Invest" section, select "Crypto," and choose the cryptocurrency you wish to sell. Enter the amount you want to sell and confirm the transaction.

Q4: Can I transfer cryptocurrency from my Fidelity account to an external wallet?

A4: Yes, you can transfer cryptocurrency from your Fidelity account to an external wallet. Navigate to the "Trade" or "Invest" section, select "Crypto," and choose the cryptocurrency you want to transfer. Enter the destination wallet address and confirm the transaction.

Q5: Is it safe to buy cryptocurrency through Fidelity?

A5: Fidelity is a reputable brokerage firm with a strong track record of security measures. However, it's important to take additional precautions, such as using strong passwords, enabling two-factor authentication, and storing your cryptocurrency in a secure wallet.

Conclusion:

Buying cryptocurrency through Fidelity is a straightforward process, providing investors with access to a wide range of digital assets. By following the steps outlined in this guide, you can easily create a Fidelity account, navigate the platform, understand fees, store your cryptocurrency securely, and consider the tax implications. Remember to stay informed about the market and take appropriate measures to protect your investment.