Senator Elizabeth Warren Demands Answers From Fidelity for Allowing Bitcoin in Retirement Plans – Two US senators, including Elizabeth Warren, have written to Fidelity Investments, requesting answers about the company’s decision to allow bitcoin investments in 401(k) plans.
“Investing in cryptocurrencies is a hazardous and speculative gamble,” the congressmen wrote, “and we are worried that Fidelity would incur these risks with millions of Americans’ retirement assets.”
Senator Elizabeth Warren has written to Fidelity Investments CEO Abigail Johnson, raising concerns about the company’s intention to enable bitcoin investments in 401(k) plans. Senator Tina Smith of the United States also signed the letter, dated May 4.
The legislators wrote:
We’re writing to inquire about the correctness of your company’s choice to include bitcoin in its 401(k) investment plan, as well as the steps you’ll take to handle the significant risks of fraud, theft, and loss posed by these assets.
The Department of Labor expressed “severe concerns” about cryptocurrency investment options in 401(k) plans, noting “substantial risks of fraud, theft, and loss” posed by crypto assets, according to the letter.
Senators Warren and Smith emphasized the following:
In fact, investing in cryptocurrencies is a high-risk, high-reward gamble, and we are concerned that Fidelity will incur these risks with the retirement funds of millions of Americans.
The two senators then went on to compare bitcoin’s volatility to that of the S&P 500. They also mentioned that Tesla CEO Elon Musk’s tweets influenced the cryptocurrency’s price, adding that the “high concentration of bitcoin ownership and mining enhances these volatility issues.”
Fidelity announced in 2017 that it was mining cryptocurrency, according to the letter. Since then, the financial services company has expanded its cryptocurrency products, including launching its own crypto fund for high-net-worth customers.
“Fidelity has decided to continue full speed ahead with enabling bitcoin investments,” the senators wrote, adding that the corporation is doing so “despite a lack of demand for this option – only 2% of companies expressed interest in adding cryptocurrencies to their 401(k) menu.”
Senator Elizabeth Warren Demands Answers From Fidelity for Allowing Bitcoin in Retirement Plans – Finally, the two senators posed five questions to Fidelity and sought responses by May 18. They want to know why Fidelity ignores the Labor Department’s crypto warning, the specifics of the company’s bitcoin risk assessment, the fees customers would be charged, how Fidelity manages its own conflicts of interest, and how much money the company has made from crypto mining.