What You Need to Know
- Adding Bitcoin to 401(k)s is a speculative gamble, Sens. Elizabeth Warren and Tina Smith said in a letter.
- They expressed concern that Fidelity, which mines Bitcoin, has a conflict of interest.
- Another question they asked: Why did Fidelity ignore DOL's concerns?
Fidelity is facing pressure from Washington to explain its decision to allow investors to put Bitcoin in their 401(k) accounts.
Sens. Elizabeth Warren, D-Mass., and Tina Smith, D-Minn., pressed Fidelity Investments CEO Abigail Johnson on Wednesday in a letter to answer questions on the “risky” move.
“We write to inquire about the appropriateness of your company’s decision to add Bitcoin to its 401(k) investment plan menu and the actions you will take to address ‘the significant risks of fraud, theft and loss’ posed by these assets,” Warren and Smith wrote.
“In short, 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 said.
Ali Khawar, acting head of the Labor Department’s Employee Benefits Security Administration, told The Wall Street Journal on April 26 that Labor has “grave concerns with what Fidelity has done.”
Fidelity’s plan to allow investors to put Bitcoin in their 401(k) accounts risks the retirement security of Americans, Khawar said.
Fidelity announced on April 26 that, starting later this year, the 23,000 or so firms that use Fidelity Investments to administer their retirement plans will have the option to offer Bitcoin through Fidelity’s core 401(k) plan lineup.