Senators Once Again Ask Fidelity to Stop Offering Bitcoin in 401(k)s

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Three US Sen­a­tors have urged Fideli­ty to stop its 401(k) spon­sor part­ners from offer­ing bit­coin expo­sure — liken­ing cryp­to invest­ing to “catch­ing light­ning in a bottle.”

In a Mon­day let­ter penned to Fideli­ty CEO Abi­gail John­son, Demo­c­rat Sen­a­tors Eliz­a­beth War­ren, Dick Durbin and Tina Smith argue that cryp­to mar­kets have become riski­er fol­low­ing FTX’s sud­den col­lapse, mak­ing bit­coin unsuit­able for retire­ment plans.

The Sen­a­tors described the cryp­to indus­try as “full of charis­mat­ic wun­derkinds, oppor­tunis­tic fraud­sters and self-pro­claimed invest­ment advi­sors pro­mot­ing finan­cial prod­ucts with lit­tle to no transparency.”

“As a result, the ill-advised, decep­tive, and poten­tial­ly ille­gal actions of a few have a direct impact on the val­u­a­tion of bit­coin and oth­er dig­i­tal assets,” they said. Durbin received $2,900 in cam­paign con­tri­bu­tions from dis­graced FTX CEO Sam Bankman-Fried, mon­ey he report­ed­ly says will be donat­ed to charity.

The let­ter fol­lows sim­i­lar pleas in May and July. Sen­a­tors War­ren and Smith have pre­vi­ous­ly cit­ed the cryp­tocur­ren­cy sector’s murky val­u­a­tions as rea­son for cau­tion, label­ing invest­ing in dig­i­tal assets a “spec­u­la­tive gamble.”

Boston-based Fideli­ty began allow­ing employ­ees to put as much as 20% of their retire­ment sav­ings into bit­coin expo­sure this fall.

The cryp­to indus­try con­sid­ered the move a strong sign of shift­ing insti­tu­tion­al sen­ti­ment toward the 12 year old asset class, although bit­coin has shed some 60% of its val­ue since Fideli­ty flagged the 401(k) move in late April.

Fideli­ty, which over­all boasts some $9.6 tril­lion in assets under admin­is­tra­tion, is the largest indi­vid­ual retire­ment plan (IRA) provider in the US — sup­port­ing more than 35 mil­lion IRA, 401(k) and 403(b) retire­ment accounts. As of 2020, FIdeli­ty con­trolled more than a third of the retire­ment fund mar­ket in the US, main­tain­ing $2.4 tril­lion in 401(k) assets.

“Any invest­ment strat­e­gy based on catch­ing light­ning in a bot­tle, or moti­vat­ed by the fear of miss­ing out, is doomed to fail,” the Sen­a­tors said. 

“By many mea­sures, we are already in a retire­ment secu­ri­ty cri­sis, and it should not be made worse by expos­ing retire­ment sav­ings to unnec­es­sary risk.”


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