The entire point of Bitcoin is to eliminate counter-party risk with respect to money. Paying extra for counter-party risk is just asking to lose all the money you poured into those accounts.

If Fidelity really wanted to embrace Bitcoin, their service would consist of teaching their customers how to do self-custody properly. But teaching old people how Bitcoin works is hard; it's so much easier to leave people ignorant and tell them that custodial Bitcoin is the same as self-custody Bitcoin.

Plus, when Fidelity loses tons of money along with the rest of the financial system, all the Bitcoin they purchased (assuming Fidelity isn't using a custodial service) will get sold at auction -- to be bought by Bitcoin maxis.

I see it as a net positive, but not absolute positive for the Bitcoin ecosystem. While I (and I suspect most folks here at Stacker news) would advocate that people self-custody their coins, not everyone agrees with me and that is alright. Bitcoin is big enough for folks with differences of opinions, especially since those folks are personally responsible and have to bear the costs for their mistakes without a bailout.

If nothing else, Fidelity's BTC trading can be a stepping stone to people learning more about Bitcoin that they just purchased, so they can decide to eventually self custody. But the simple fact to bringing Bitcoin into the mainstream where less tech-saavy folks can easily interact with it with a name that they likely trust more than Coinbase, Swan, Binance, or other niche-crypto names seems like a win to me. I would love it if the next step for Fidelity to integrate lightning so that their users can have a Savings/Investment account at Layer 1 and a Checking account at Layer 2...but that's probably a pipe dream.