A trio of Democratic senators are demanding that Fidelity explain its reasoning for allowing retirement savers to invest their money in Bitcoin.
In April, Fidelity said it would give the 23,000 companies using its 401(k) platform the option of letting plan participants put up to 20% of their 401(k) savings into Bitcoin.
Now, Senate Majority Whip Dick Durbin, D-Illinois, and U.S. Senators Elizabeth Warren, D-Massachusetts, and Tina Smith, D-Minnesota want to know why.
“While we appreciate Fidelity's efforts to help working Americans realize a more secure retirement, this decision is immensely troubling,” the senators wrote in a letter earlier this week. “Perhaps most troubling is that in pointing to the risks of investing in Bitcoin on its website and planning to cap plan participants' Bitcoin exposure to 20 percent, Fidelity is acknowledging it is well aware of the dangers associated with investing in Bitcoin and digital assets, yet is deciding to move ahead anyway.”
“This asset class is unwieldy, immensely complex, unregulated, and highly volatile. Working families' retirement accounts are no place to experiment with unregulated asset classes that have yet to demonstrate their value over time,” the senators added.
Fidelity’s announcement that it would let 401(k) savings be invested in crypto came a little over a month after the Department of Labor issued a warning to 401(k) plan fiduciaries to “exercise extreme care” before including cryptocurrencies in their plan menus.
Immediately following Fidelity’s announcement, Ali Khawar, acting assistant secretary of the DOL’s Employee Benefits Security Administration, said the agency had “grave concerns” about the company’s move.
Fidelity chief executive officer Abigail Johnson said earlier this month that not everyone at the firm has supported its pioneering push into crypto — Fidelity began mining Bitcoin back in 2014 — but believes that it’s “the time to double down and just dive extra-hard into it."
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