How to Buy Crypto Without an Exchange: Fidelity Crypto vs. PayPal for Bitcoin & Ethereum in New York State

It’s easy to put off buying crypto. Life is busy, free time is precious, and who really wants to spend hours setting up accounts, downloading apps, remembering passwords and learning brand new programs? Certainly not the masses.

If that sounds familiar, this New Yorker has got you covered.

Despite strict regulations, New York residents can buy the two most popular cryptocurrencies, Bitcoin and Ethereum, without an exchange, using well-known giants: Fidelity and PayPal.

With just a few clicks of the button, existing Fidelity Brokerage users can get hooked up to the crypto portal. While the steps are even faster for PayPal users with a verified individual account.

So no more excuses. If buying crypto is on the back burner because you don’t want to learn how to buy from a NY crypto exchange, Fidelity and PayPal crypto might be the easiest way to buy crypto you never knew existed.

Coming up, I’ll go over how I used both Fidelity and PayPal to buy cryptocurrencies in the state of New York along with any tips, pros & cons, and things I learned along the way.

Fidelity Crypto vs. PayPal Crypto Chart

Feature	Fidelity Crypto	PayPal Crypto
Coins Available	Bitcoin Ethereum	Bitcoin Ethereum Bitcoin Cash Litecoin PYUSD (stablecoin)
Minimum Purchase	$1.00	$1.00
Allowed Activities	Buy Sell	Buy Sell Transfer
Spread/ Fees	1% Spread 0 Trade Fees	Variable Spread Tiered Trade Fees
Difficulty	Beginner Friendly	Beginner Friendly

How to use Fidelity to Buy Crypto in New York

New York residents can use Fidelity to buy both Bitcoin (BTC) and Ethereum (ETH) cryptocurrencies. The crypto offers are through Fidelity Digital Asset Services LLC, and the integration into Fidelity’s regular trading platform is seamless.

Fidelity operates in NY under a Limited Purpose Trust Charter, granted in late 2019. You can check your state’s availability here.

One of my favorite features about Fidelity Crypto is that I can see it, along with my regular trading account and retirement accounts using the same login credentials.

Here is an example of what my sidebar looks like when I’m inside the account page of my Fidelity account. See how every account type, including crypto, is under one roof?

Of course every New Yorker knows that looks aren’t everything, so let’s get into all the other reasons I like using Fidelity Crypto and do a quick review of the sign-up steps.

Steps to Start Buying Crypto on Fidelity

1. Existing users Login to Fidelity/ New users go to the Homepage
2. Navigate to “Products” Tab
3. Click “Crypto” for Drop Down Menu
4. Select Individual or Joint Account
5. Fill out Name, address, phone etc., and answer easy questions
6. Link a bank account

Current Fidelity Account Holders will find it easiest to log into your account, and then navigate to the Products Tab. Click the Product Link drop down and select “crypto.” Here is an example screenshot:

As long as you do this from inside your account, Fidelity will automatically determine what it needs from you in order to setup a crypto account.

For instance, if you only have retirement accounts with Fidelity, they will have to setup 2 accounts. One regular trading account and one crypto account. Here is what that message looks like:

You will use the regular trading account to fund the Crypto account, but both accounts will be connected.

If you already have a non-retirement trading account, Fidelity could use that account. Just follow the prompts when asked.

Can You Buy Crypto with Fidelity Roth, IRA’s or 401K?

I was not able to buy crypto with my Roth, Traditional or SEP IRA at Fidelity. At this time, Crypto cannot be bought with retirement accounts and that includes 401k accounts.

I predict this will be available at some point because Fidelity has been one brokerage leading the way with crypto. It’s a FAQ on Fidelity’s site and I hope they are working on a way to make this happen.

Fidelity Crypto Pros and Cons

Fidelity Crypto is a good platform for buying cryptocurrencies Bitcoin and Ethereum. While my experience using Fidelity to buy BTC and ETH is positive, it does have some downside for those looking for variety and transfers.

How Does Fidelity Store Our Crypto?

According to their website, Fidelity Crypto storage is done in-house and they do not use 3rd party storage companies. They explain how they use a combination of hot and cold storage in this document.

Fidelity Crypto Review & Summary

I personally like using Fidelity Crypto and I’m keeping it! It’s easy to use and if you like having all of your investments under one roof, you can do that with Fidelity Crypto.

The fees are excellent. Considering most places charge both a spread (difference between actual price and price offered) and trade fees (charge for placing the order), Fidelity only charges a 1% spread, and no fees to trade.

Since there are no account maintenance fees or trading fees, Fidelity Crypto is a no brainer if you want Bitcoin and Ethereum, and don’t care about self-custody.

That said, if you want to move BTC and ETH off of Fidelity Crypto, you’ll have to sell and turn it into dollars. Even though I really like using Fidelity Crypto, the inability to transfer means I will never use it exclusively.

How to Buy Crypto using PayPal in New York

Through a full BitLicense, Payment Processor giant PayPal can be used in the state of New York to buy a limited amount of cryptocurrencies. The coins available at the time of this writing are: Bitcoin, Ethereum, Bitcoin Cash, Litecoin and PYUSD which is PayPal’s stable coin.

The ability to buy crypto on PayPal dates back to 2020 when they were granted the first “conditional” BitLicense. That agreement is history as PayPal now operates with the full BitLicense.

Timeline of Events: PayPal’s crypto offerings to NY residents:

• October 2013 – NY grants PayPal a Money Transmitter License
• June 2015 – New York State Department of Financial Services (“DFS”) issued its virtual currency regulation
• June 2020 – NY state announces framework for a “conditional BitLicense” which might allow a company without a BitLicense, the ability to collaborate with an existing regulated entity.
• Oct 2020 – PayPal is the first to receive conditional BitLicense by partnering with Limited Purpose Trust Charter: PAXOS
• June 2022 – PayPal granted full BitLicense and can operate independent of PAXOS
• August 2023 – PayPal announces launch of its stablecoin PYUSD

Steps to Buy Crypto Using PayPal in NY

1. Login to your PayPal account
2. Click finances tab or crypto button
3. Click Buy button
4. Choose the crypto you want
5. Enter $ amount & frequency and click next
6. Choose a payment method and click next
7. Click authorize and schedule 

*** PayPal Business Account *** It’s important to not that you cannot buy crypto using a PayPal business account. This crypto buying links are only allowed inside of an individual PayPal account.

Can you Transfer Crypto Off PayPal in NY?

Yes, New York residents can buy crypto on PayPal and transfer the crypto to a personal cold or hot wallet. We can also use it to pay other PayPal users just like we can send dollars by using someone’s PayPal email address.

It’s worth noting that there are minimums for transferring out to an external wallet. For instance in order to move Bitcoin out of PayPal and into your personal wallet, the amount must be at lease .001 Bitcoin. For example: if Bitcoin is at $40,000 you can’t transfer out less than $40 (.001).

Accounts with negative balances may not be able to transfer and all purchases must have cleared. Even though you may see your recent crypto purchase in your PayPal crypto balance, the send button may not be displayed, or it could be visible but inactive until the transaction settles. The settling process could take several days.

How to Transfer Crypto off PayPal and Into A Different Wallet in 7 Steps

Transferring crypto off PayPal is tricky the first time, but fast and easy once you learn where to find the send button and learn how to enter your wallet address. Here are the steps for transferring crypto from PayPal to your wallet address:

1. Login to PayPal
2. Click the Crypto Icon
3. Select the crypto you want to move
4. Click the tiny double arrow button (see pic below)
5. Click the airplane icon or “Send” (see pic below)
6. Paste your copied wallet address into the search bar (see pic below)
7. Confirm.

Even if you’ve been using PayPal for years, there is a good chance you’ll have to do a quick verification before you can transfer crypto out of PayPal. You’ll know this if you click the double arrow button and PayPal tells you they need more information.

If that message pops up, you’ll have to supply the information before you can transfer. Typically they want you to verify the address and phone number they have on file and then they’ll need a taxpaper ID.

Pros and Cons of Using PayPal to Buy Crypto

PayPal is a convenient platform for buying a limited amount of cryptocurrencies and provides flexible options. On the downside, like any good convenience store, you’ll pay a premium at the checkout.

PayPal Fees for Buying Crypto (Bitcoin, Ethereum, Litecoin)

PayPal charges a fixed transaction fee based on the amount of your crypto purchase. This tiered approach starts small at just .49 cents for trades under $4.99.

While .49 cents is a drop in the bucket, the % is rather high (10% for $4.99 and 49% for buying $1.00).

But as you increase your crypto purchase amounts, the fees become more reasonable. For instance $200 worth of Bitcoin will incur a $2.49 fee or 1.25%.

In addition to the trading fee PayPal includes a variable spread. Here is a snapshot of the current fees you’ll pay at checkout:

At the time you buy, sell, or convert Crypto Assets (other than when you buy or sell PYUSD in exchange for U.S. dollars), we will disclose to you the applicable exchange rate and the amount of fees that you will be charged for that transaction. The exchange rate will include an estimated spread of one percent (1.00%), provided, however, that the actual spread may be higher or lower based on market conditions. We will not separately calculate or disclose the spread we earn on each transaction.

Link to PayPal Legal Disc.

Acceptable Payment Methods for PayPal Crypto Buying

PayPal allows you to use any linked bank account, debit card, and even your PayPal balance can be used as a payment method for buying crypto. While I have credit cards linked to my PayPal account, they do not appear in the buying window as an option and a message shows that credit cards cannot be used (see below).

PayPal Crypto Review & Summary

It’s important to have at least one easy way to buy crypto and PayPal delivers. PayPal options are limited, but you are allowed to take control of your crypto by moving it to private wallets…and that’s nothing to sneeze at in New York.

I see PayPal’s crypto platform as an opportunity to invest in the major crypto offerings, without the added stress that comes with learning new “techy” things. I think of my friends and family who barely know how to use a smart phone. They would never even consider downloading a crypto phone app, yet they’ve probably had a PayPal account for years.

In that regard, PayPal crypto has its place and deserves a seat at the table for catering to all sectors of the population.

Like anything that’s convenient, you end up paying extra for easy accessibility. For many, PayPal’s convenience fees far outweigh the time and effort it would take to get the crypto cheaper.

Thanks for stopping by. Interested in more ways to acquire crypto in NY? Head back to the homepage and review the guide.