Three US Senators are writing to Fidelity’s chief executive over concerns about the banking giant’s “disturbing” plan to offer Bitcoin (BTC) to businesses as a retirement plan.
In the statement, Senators Elizabeth Warren, Tina Smith and Fidelity CEO Richard Durbin ask Abigail Johnson why one of the most trusted financial services firms in the world is endorsing such a volatile asset as an option for 401(k) plans.
“We’re writing today to ask why Fidelity, a trusted name in the retirement industry, would allow plan sponsors to offer plan participants exposure to Bitcoin.
While plan sponsors are ultimately responsible for selecting the assets available to participants, it seems ill-advised for one of the leading names in finance to support the use of such a volatile, illiquid and speculative asset in 401(k) plans – intended to be retirement vehicles characterized by consistent contributions and steady returns over time.”
The senators go on to say that investing in BTC does not guarantee long-term profits and that traders should be wary of viewing the king crypto as a hedge against inflation due to its price volatility.
“For a while, many consumers had reason to believe they had solid foundations in their decision to put their hard-earned dollars into bitcoin.
An entire ecosystem ranging from self-proclaimed experts in cryptocurrency investing on social media to high-paid actors and celebrities and even some Washington lawmakers has led many to believe that investing in Bitcoin or other digital assets is a sound investment strategy that can evolve would pay well across the board.
Some even went so far as to call Bitcoin an “inflation hedge” that would prove a useful investment tool during times of high inflation. When Bitcoin peaked at $68,000 in November 2021, many of these proponents sounded prescient. Today, Bitcoin stands at $20,849 – more than two-thirds below its peak.”
The senators then say the most worrying aspect of Fidelity’s BTC offering is that the company is aware of the risks.
“While we appreciate Fidelity’s efforts to help working Americans achieve safer retirement, this decision is extremely troubling.
Perhaps most troubling, by noting the risks of investing in bitcoin on its website and planning to limit plan participants’ bitcoin exposure to 20 percent, Fidelity is acknowledging that it is aware of the dangers associated with investing in bitcoin and digital assets decides to go ahead anyway.”
In April, the US Department of Labor also expressed “serious concern” about Fidelity’s plan.
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