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Senator Elizabeth Warren Demands Answers From Fidelity For Allowing Bitcoin In Retirement Plans

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Senator Elizabeth Warren Demands Answers From Fidelity For Allowing Bitcoin In Retirement Plans

Two U.S. senators, including Elizabeth Warren, have sent a letter to Fidelity Investments demanding answers regarding the company’s decision to allow bitcoin investments in 401(k) retirement plans. “Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans’ retirement savings,” the lawmakers wrote.

US Lawmakers Concerned About Fidelity Allowing Bitcoin Investments in 401(k) Plans

U.S. Senator Elizabeth Warren (D-MA) has sent a letter to Abigail Johnson, the CEO of Fidelity Investments, questioning the financial services giant’s plan to allow bitcoin investments in 401(k) accounts. The letter, dated May 4, is also signed by U.S. Senator Tina Smith (D-MN).

The lawmakers wrote:

We write to inquire about the appropriateness of your company’s decision to add bitcoin to its 401(k) investment plan menu and the actions you will take to address ‘the significant risks of fraud, theft and loss’ posed by these assets.

The letter notes that Fidelity’s announcement followed the Department of Labor expressing “serious concerns” about cryptocurrency investment options in 401(k) plans, citing “significant risks of fraud, theft and loss” posed by crypto assets.

Senators Warren and Smith stressed:

In short, investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans’ retirement savings.

The two senators proceeded to highlight the volatility of bitcoin compared to stocks in the S&P 500. They also noted that the price of the cryptocurrency was influenced by Tesla CEO Elon Musk’s tweets and the “high concentration of bitcoin ownership and mining exacerbates these volatility risks.”

The lawmakers additionally warned:

We are also concerned about Fidelity’s potential conflicts of interest and the extent to which they may have affected the decision to offer bitcoin.

The letter references Fidelity’s announcement in 2017 that it had been mining cryptocurrency. Since then, the financial services firm has ramped up its crypto offerings, including offering its own crypto fund for wealthy customers.

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With the latest announcement, the senators said: “Fidelity has decided to move full speed ahead with supporting bitcoin investments,” claiming that the firm is doing so “Despite a lack of demand for this option — only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu.”

In conclusion, the two senators asked Fidelity five questions and requested answers by May 18. They want to know why Fidelity ignores the Labor Department’s crypto warning, the details of the company’s bitcoin risk assessment, the fees customers will incur, how Fidelity addresses its own conflicts of interest, and how much the company has earned from crypto mining activities.

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What do you think about Senator Elizabeth Warren questioning Fidelity on its decision to allow bitcoin investments in retirement accounts? Let us know in the comments section below.

Kevin Helms

A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

401(k) bitcoin

Fidelity’s New 401(K) Product Lets Workers Add Up To 20% In Bitcoin To Their Retirement Plans

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Fidelity’s New 401(K) Product Lets Workers Add Up To 20% In Bitcoin To Their Retirement Plans

The multinational financial services corporation based in Boston, Fidelity Investments, has revealed the firm is allowing people to add bitcoin into their 401(k) plan as long as the employer allows it. According to Fidelity’s head of workplace retirement offerings, the company has seen “growing interest from plan sponsors” that wanted to add bitcoin to retirement plans.

Fidelity Is Giving Workers the Ability to Add Bitcoin to Their 401(k) Plan

Fidelity Investments, the largest 401(k) plan provider in the United States, is now allowing people to add bitcoin to their retirement accounts. According to a report from the New York Times (NYT), Fidelity’s head of workplace retirement offerings Dave Gray explained that the company was noticing demand for adding digital assets to the firm’s 401(k) plans.

“We started to hear a growing interest from plan sponsors, organically, as to how could Bitcoin or how could digital assets be offered in a retirement plan,” Gray remarked. The financial services company also noted that the digital assets account will be broadly available by the second half of 2022.

The digital assets account will be managed like a traditional mutual fund and employees can designate a percentage of bitcoin to their workplace retirement offerings. According to the NYT report, the percentage will be limited and the retirement account’s fee will be between 0.75% to 0.90% of the plan owner’s percentage of assets.

For now, Fidelity will only allow an investment of 20%, but said the allocation percentage could change in the future. Of course, employers also have to approve the plan and allow employees to save part of their 401(k) in bitcoin, and employers will determine the percentage threshold. According to the Boston-based financial institution, the business intelligence firm Microstrategy has already signed up for Fidelity’s bitcoin-infused 401(k) offering.

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What do you think about Fidelity allowing people to add bitcoin to their 401(k) retirement plans? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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