Bitcoin in 401(k)? Senators increase pressure on Fidelity to reconsider crypto in retirement plans
By Jessica Hall
Democratic senators Dick Durbin, Elizabeth Warren and Tina Smith stepped up pressure Monday on Fidelity Investments to reconsider its decision to allow employers to offer bitcoin exposure to 401(k) plan participants in the wake of crypto exchange FTX filing for bankruptcy earlier this year the month. .
The senators first wrote a letter to Fidelity in July.
“Since our last letter, the digital asset industry has only become more volatile, tumultuous and chaotic — all features of an asset class that no plan sponsor or retirement saver would want to get anywhere near,” the senators wrote in the letter. released Monday.
Fidelity did not immediately comment on the senators’ letter.
Read: Fidelity launches waiting list to offer crypto trading to retail investors
Bitcoin traded as low as $15,591 on Monday, its lowest level since November 2020, according to CoinDesk data.
Read: Coinbase worth less than $10 billion for first time as ‘crypto winter’ continues to set in
In April, the Boston-based investment firm said it was offering a bitcoin option for the 401(k) plans it manages, though employers will have the final say on whether to roll out the feature to plan participants. The product will be available to employers in Fidelity’s 401(k) series by the middle of the year, the company said at the time.
Read: Why I Don’t Want Bitcoin in My 401(k)
Fidelity had said it would establish a limit on how much of a 401(k) plan can be invested in bitcoin — no more than 20%. Fidelity will give the 23,000 companies that use its platform to manage their pension plans the ability to adjust that limit, perhaps choosing 5% or 10%, but no more than 20%.
The retail investor waiting list is not the financial firm’s first move into the crypto space. It already issues a bitcoin exchange-traded fund (ETF) in Canada and ETFs in the US
The move came after the number of cryptocurrency investors had grown significantly, with 22% of households using crypto in 2021, up from 8% in 2020, according to research firm Hearts & Wallets.
Read: This is why bitcoin won’t ‘diversify’ your 401(k)
However, the crypto’s credibility and value have been battered in recent weeks amid the bankruptcy filing of FTX after halting customer withdrawals.
In March, the Department of Labor, which regulates company-sponsored retirement plans, told 401(k) sponsors to exercise caution when including cryptocurrencies in their 401(k) plans.
Ali Khawar, acting assistant secretary of the Department of Labor’s Employee Benefits Security Administration, had said that “at this early stage in the history of cryptocurrency,” the department has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs. coins and cryptoassets.”
– Jessica Hall
(END) Dow Jones Newswires
11-21-22 1823ET
Copyright (c) 2022 Dow Jones & Company, Inc.
