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July 28, 2022 at 01:55 PM
What You Need to Know
- In their letter, senators say retirement accounts shouldn't be exposed to 'untested, highly volatile assets.'
- Fidelity is 'well aware of the dangers' associated with Bitcoin investing, the senators added.
- Pro-Bitcoin tweets say the senators are on the wrong side of history.
Three U.S. senators sent a letter to Fidelity Investments CEO Abigail Johnson this week to challenge the mutual fund giant’s “immensely troubling” plan to let investors add Bitcoin to their 401(k) accounts.
“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?” Sens. Richard Durbin, D-Ill., Elizabeth Warren, D-Mass., and Tina Smith, D-Minn., wrote, noting that the cryptocurrency is unregulated and now trades at more than two-thirds off its November peak.
“While the underlying technology of blockchain shows promise and has the potential to be used for innovative and exciting applications, consumers must be wary of the risks associated with Bitcoin and other digital assets. What appears to be certain is many are unaware of the potential risks and financial dangers posed by digital assets like Bitcoin,” they said in the letter dated July 26.
Durbin tweeted the message Wednesday, saying he and his colleagues were sounding the alarm. We should all agree, he tweeted, that “workplace retirement accounts are no place to gamble.”
The senators, noting that the company cites the risks on its own website and plans to cap 401(k) Bitcoin holdings at 20%, called it troubling that “Fidelity is well aware of the dangers associated with investing in Bitcoin and digital assets, yet is deciding to move ahead anyway.”
“There are many ways that Americans can invest in Bitcoin and the cryptocurrency casino, but it seems as though this latest effort, through what is supposed to be a retirement nest egg, is a bridge too far,” they wrote, adding that ”retirement accounts must be held to a higher standard” that 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 said.
Warren and Smith sounded the same alarm in May when they wrote a similar letter to Johnson. The U.S. Department of Labor, among others, has raised concerns as well.
