The United States government is growing increasingly concerned about Bitcoin (BTC) in retirement savings, with two Senators flagging some issues in Fidelity Investmentsโ plans to include Bitcoin (BTC) in 401(k) accounts.
Senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota expressed concerns over Fidelityโs decision to add BTC to its 401(k) investment plan in a letter to Fidelity CEO Abigail Johnson.
Dated May 4, the letter suggests that Fidelityโs latest Bitcoin plan has potential conflict of interest, noting that Fidelity has been deeply involved in crypto since starting experimenting with BTC and ETH mining operations and integrating Coinbase accounts back in 2017.
On April 26, Fidelity announced plans to allow retirement savers to allocate up to 20% of their portfolio in BTC, citing high client demand. Sens. Warren and Smith, however, argued that there was not enough client demand for this opportunity, stating:
โDespite a lack of demand for this option โ only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu โ Fidelity has decided to move full speed ahead with supporting Bitcoin investments.โ
The letter also mentioned โsignificant risks of fraud, theft and lossโ associated with crypto assets. The Senators referred to a statement by the Department of Labor (DOL), which warned in March that any significant crypto investments within company-sponsored retirement accounts may attract legal attention. The authority also pointed out risks related to cryptocurrenciesโ โextreme volatility and high speculation,โ custodial and recordkeeping concerns and others.
โIn short, investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americansโ retirement savings,โ the Senators wrote in the letter.
Related: The 1M euro Bitcoin retirement plan reaches 200K: โItโs not too late to investโ
In order to better understand Fidelityโs decision to adopt BTC for 401(k)s, the Senators requested the firm to provide answers on how they are planning to address risks laid out by the DOL by May 18, 2022. They also asked to provide more information about Bitcoin investment fees and the amount of money generated from Fidelityโs crypto mining operations.
