Fidelity Investments’ Bitcoin 401(k) Plan Cones Under Fire by US Lawmakers

Two US lawmakers, Senator Elizabeth Warren (D-Massachusetts) and Senator Tina Smith (D-Minnesota) have questioned Fidelity Investments’ recent announcement to allow customers to put Bitcoin into their 401(k) retirement accounts. This questioning comes after the US Department of Labor tables similar concerns with the investment firm.

The senators wrote a letter to the CEO of the behemoth investment company, Abigail Johnson, on Wednesday questioning the “appropriateness” of its proposed Bitcoin investment plans.

The letter highlighted the erratic nature of the benchmark cryptocurrency, further questioning Fidelity’s plans to protect investors from other risks like fraud, theft, and loss. The letter noted:

“Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans’ retirement savings.”

The lawmakers also stated that the company had “potential conflicts of interest,” which they believe influenced the firm’s decision. The letter explained that Fidelity has engaged in Bitcoin and Ethereum mining in the past and launched a Bitcoin Index Fund for qualified investors.

Department of Labor Already Cautioned Against Fidelity Investments’ Bitcoin Plan

As mentioned earlier, the lawmakers’ questioning mirrors the concerns expressed by the Department of Labor (DOL). Ali Khawar, a senior official at the organization, described crypto as a speculative asset class with too much FOMO (fear of missing out). He also argued that the volatile nature of cryptocurrency needs to mature before people are allowed to put their retirement savings into it.

Interestingly, the Department of Labor called on the public in a press release earlier this year to exercise restraint from putting money into crypto as a retirement option. This caution predated Fidelity Investments’ Bitcoin 401(k) announcement.