July 16, 2021 • 17 min read Introduction To date, much of the discussion in the institutional investor community has focused on “why bitcoin?” If one does arrive at the conclusion that bitcoin is appropriate for their portfolio, often the next logical question is “how” to gain exposure. In this piece, we will discuss the benefits and considerations of different channels for exposure, including third-party custody, passive single-asset funds, futures contracts, and actively managed funds. A core feature of bitcoin (and digital assets broadly) is the ability for holders to self-custody the assets and establish ownership in the truest sense, removing the need to trust intermediaries that enforce control over the assets. However, many institutions that have fiduciary obligations face regulatory and operational limitations that prevent them from taking direct custody of the assets. Additionally, as it stands, self-custody requires robust security and risk management processes that certain institutions may not feel comfortable taking on or may not have the time and resources to build out. Benefits and Considerations To accommodate for this reality, the channels for exposure to bitcoin have expanded significantly as institutional interest in the asset has grown. In this piece, we focus on the benefits and challenges of multiple channels institutional investors may consider after deciding they should make an allocation to the asset class. Download the report The information herein was prepared by Fidelity Digital Asset Services, LLC and is for informational purposes only and is not intended to constitute a recommendation, investment advice of any kind, or an offer to buy or sell securities or other assets. Please perform your own research and consult a qualified advisor to see if digital assets are an appropriate investment option. Digital assets are speculative and highly volatile, can become illiquid at any time, and are for investors with a high-risk tolerance. Investors in digital assets could lose the entire value of their investment. Fidelity Digital Asset Services, LLC does not provide tax, legal, investment, or accounting advice. This material is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. Tax laws and regulations are complex and subject to change. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Investors in digital assets could lose the entire value of their investment. Fidelity Digital Asset Services, LLC does not provide tax, legal, investment, or accounting advice. This material is not intended to provide, and should not be relied on, for tax, legal, or accounting advice. Tax laws and regulations are complex and subject to change. You should consult your own tax, legal, and accounting advisors before engaging in any transaction. Trademarks and logos used within are the property of their respective owners. Services provided by Fidelity Digital Asset Services, LLC, a New York State-chartered, limited liability trust company (NMLS ID 1773897). Fidelity Crypto LC and the Fidelity Crypto LC logo are service marks of FMR LLC. © 2021 FMR LLC. All rights reserved. 988289.1.0