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Fidelity’s Bitcoin Policy Questioned Directly By Senators


On July 26, Democratic Senators Dick Durbin, Elizabeth Warren, and Tina Smith sent a letter to Fidelity Investments CEO, Abigail Johnson, asking why Fidelity would allow plan sponsors to offer Bitcoin as an investment for plan participants.  The Senators said, “it seems ill-advised for one of the leading names in the world of finance to endorse the use of such a volatile, illiqud and speculative asset in 401(k) plans.”

After citing how difficult it is for many Americans to save for retirement and many are likely to outlive their savings, the Senators said, “it begs the question: when saving for retirement is already a challenge for so many Americans, why would Fidelity allow those who can save to be exposed to an untested, highly volatile asset like Bitcoin?”  The letter goes on to state, “What appears to be certain is many are unaware of the potential risks and financial dangers posed by digital assets like Bitcoin”.

The letter then cites the recent fall of Bitcoin’s value by more than two-thirds off its peak in November of 2021 and said that Fidelity’s decision is “immensely troubling.”  It pointed out that Fidelity’s limit of only allowing participants to invest 20% of their account in Bitcoin and pointing out the risks on its Website, Fidelity acknowledges it is well aware of the dangers associated with investng in Bitcoin and digital assets yet decided to offer the investment anyway.

The Senators conclude stating there are many other  ways Americans can invest in Bitcoin and the “cryptocurrency casino” but through a retirement plan is. . . “a bridge to far.  Retirement accounts must be held to a higher standard, one that Bitcoin and other unregulated digital assets fail to meet.  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 then request a response.  It will be interesting to see if they get one and what it says.  This author is in full agreement with the Senators.  See, Why Would Anyone Invest In Crypto Through A Retirement Plan?.  Of course, this all comes while ForUsAll Inc., one of the first providers to begin offering cryptocurrency funds via brokerage windows in retirement plans, has sued the Department of Labor maintaining its latest guidance on cryptocurrency (Compliance Assistance Release No.  2022-01) is unlawful.  See, Crypto Provider Fights Back Against DOL Warning Guidance.  The Department of Labor has not yet filed its answer in that suit.  Stay tuned.



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