One of Wall Street’s largest fund managers, Fidelity Investments, recently announced that it would be offering BTC to its 401(k) retirement plan clients, prompting the U.S. Department of Labor to issue a warning against the company over its alleged risking the retirement savings of millions of Americans by offering investment in a speculative asset.
Fidelity, which is one of the largest investment companies in the world with $4.2 trillion in assets under management, announced that it’s now allowing its 401(k) clients to dabble in BTC as part of their retirement plan.
The company hailed the offering, which it called the Digital Assets Account, as the first of its kind in the industry and “a significant milestone in advancing Fidelity’s position as a holistic digital assets service provider.”
“As a leader in digital assets, we are thrilled to be the first to offer employers exposure to bitcoin for the core lineup of 401(k)s that reflects our commitment to meeting their evolving needs and our belief in the promise of blockchain technology for the financial industry’s future,” Dave Gray, Fidelity’s Head of Workplace Retirement Offerings and Platforms, commented.
The offering is to launch mid this year, and already, MicroStrategy, the Michael Saylor-led company that has become more of a BTC hedge fund than a business intelligence software provider, had signed up to become the first to offer its employees part of their 401(k)s in BTC.
As @MicroStrategy continues to be a pioneer in bitcoin for corporations, we are planning to offer our employees the option to invest in #bitcoin as part of their 401K portfolio. $MSTR pic.twitter.com/xBFeEugJVj
— Michael Saylor⚡️ (@saylor) April 26, 2022
“MicroStrategy looks forward to working with Fidelity to become the first public company to offer their employees the option to invest in bitcoin as part of our 401(k) program. Teaming with companies like Fidelity that are innovating in bitcoin for corporations is important to us, as is furthering the development of the bitcoin ecosystem for institutional investors,” the laser-eyes-wielding Saylor, who has become the embodiment of BTC brainwashing (read this piece exposing his lies and half-truths), commented.
Some welcomed the move, such as EvoDeFi director Egor Volotkovich who termed it “a very bold statement.”
However, the Labor Department, which oversees company-sponsored retirement plans, isn’t impressed with the offering, a top official has told the Wall Street Journal. Ali Khawar, the acting assistant secretary of the Employee Benefits Security Administration, an agency within the department, told the outlet, “We have grave concerns with what Fidelity has done.”
Khawar cited the speculative nature of BTC and the hype generated by the fear of missing out (FOMO) as the key reasons his agency is gravely concerned about the new Fidelity offering. While acknowledging that digital currencies have “intriguing use cases,” he stated that they need to mature first before they can be considered in retirement plans.
Most Americans fully depend on their retirement plans in their old age for survival, and putting this at risk is something Khawar and his agency won’t sit idly by and watch.
“For the average American, the need for retirement savings in their old age is significant. We are not talking about millionaires and billionaires that have a ton of other assets to draw down,” he told WSJ.
Fidelity says it will cap BTC holdings for members of its 401(k) retirement plans at 20% of the account value. The company is the most dominant in the sector, holding $2.4 trillion in assets, which accounted for more than a third of the entire market.
This isn’t the first time that the Department of Labor has sounded an alarm over the inclusion of BTC in 401(k) plans. In March, it cited several concerns such as the speculative and volatile nature of the digital asset, custodial and recordkeeping concerns, valuation challenges, and even the evolving regulatory environment as some of the reasons that retirement plan providers are best served by staying away from BTC.
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