US senators urge Fidelity to reconsider its Bitcoin offerings after FTX explodes

by · November 21, 2022

US Senators Elizabeth Warren, Tina Smith and Richard Durbin have renewed their calls for Fidelity Investments to reconsider offering a Bitcoin (BTC)-linked 401(k) retirement product.

In a letter addressed to Fidelity Investments CEO Abigail Johnson on Nov. 21, the three senators said the recent drop in FTX is more reason than any for the $4.5 billion asset management company to reconsider its Bitcoin offering to retirees. and says:

“The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear that the digital asset industry is in serious trouble.”

The senators also added that “charismatic wunderkinds, opportunistic con artists and self-proclaimed investment advisers” have played a major role in manipulating the price of Bitcoin (BTC), which in turn has affected 401(k) retirement savings holders who have invested in Fidelity’s Bitcoin product:

“Since July, when we last raised concerns with you about the deeply troubling possibilities of exposing workplace retirement plans for Bitcoin, its value has fallen.”

“As the full extent of the damage caused by FTX continues to unfold, the contagion is being felt across the broader digital asset market. Bitcoin is no exception,” the senators commented.

The senators’ letter to the Fidelity chief was the second in recent months, with the first letter on July 26 demanding an explanation of why Fidelity decided to expose its clients to a Bitcoin 401(k) product to begin with.

“Since our last letter, the digital asset industry has only become more volatile, turbulent and chaotic — all features of an asset class that no plan sponsor or retirement saver should want to come close to,” the senators wrote.

Durbin, Smith and Warren also noted that about 32 million Americans and 22,000 U.S. employers use Fidelity as a workplace retirement account and employer-sponsored plan.

The senators added that with a retirement security crisis already unfolding in the country, Fidelity should not be putting customers’ retirement savings at “unnecessary risk.”

“In light of these risks and continuing warning signs, we again strongly urge Fidelity Investments to do what is best for plan sponsors and plan participants – seriously reconsider its decision to allow plan sponsors to offer Bitcoin exposure to plan participants.”

Cointelegraph reached out to Fidelity for comment on the letter, but did not immediately receive a response.

Related: Fidelity’s crypto ambitions are bigger than expected: report

Meanwhile, not all US lawmakers seem to have sided with the three crypto-skeptic senators in the past.

In May. In 2022, Republican Senator Tommy Tuberville introduced the Financial Freedom Act in the US Congress, which serves to allow US residents to add cryptocurrency to their 401(k) retirement savings plan without being subject to regulatory influence.

Fidelity has continued to increase investment in the digital asset space, with plans to expand its digital asset division by 25% with 100 new employees by the end of Q1 2023.