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Sen Elizabeth Warren Concerned About Fidelity’s Bitcoin 401K Plan

Senator Elizabeth Warren, along with Democratic Senator Tina Smith, has questioned Fidelity’s plan to allow investors Bitcoin into their 401(k) retirement savings accounts after similar concerns were raised by the U.S. Department of Labor.

Senators are asking Fidelity to weigh the risks of Bitcoin investing

In a May 4 letter to Abigail Johnson, CEO of wealth management giant Fidelity Investments, Senators Warren and Smith questioned the “appropriateness” of the company’s plan to let people invest part of their 401(k) in such a risky asset like bitcoin.

Noting Bitcoin’s volatility, the letter also asked how Fidelity would address other risks such as fraud, theft and loss. According to the senators:

“Invest in cryptocurrencies is a risky and speculative venture, and we fear that Fidelity would take these risks with the retirement plans of millions of Americans.”

Additionally, the politicians argued that the company had “potential conflicts of interest” that they believe may have influenced Fidelity’s Bitcoin decision. The letter noted that the asset manager has been involved in Bitcoin and Bitcoin trading in the past Ethereum-Mining and has also launched a Bitcoin index fund for qualified investors with a minimum investment threshold of $100,000.

Meanwhile, the senators’ investigation follows similar concerns raised by the Department of Labor (DOL). According to Acting Assistant Secretary of the Employee Benefits Security Administration Ali Khawar, crypto is a speculative asset with a lot of hype and FOMO (fear of missing out).

Khawar also pointed to the cryptocurrency’s volatility, saying that it needs to “mature” before people will be allowed to put their retirement savings into the asset class.

Prior to Fidelity’s announcement, the DOL, in a press release in March, urged trustees to exercise caution before considering adding crypto as an investment option to a 401(k) plan.

Fidelity will respond to the Senators’ request within two weeks

Senators Warren and Smith, meanwhile, asked Fidelity why it disregarded the DOL’s concerns in March. Other questions from politicians are: Fees clients incur as a result of their Bitcoin investmentshow much the money manager has made since starting crypto mining operations in 2017 and how Fidelity has addressed conflicts of interest.

The company expects to respond to the questions in the letter by May 18, 2022. According to the Wall Street Journal, a statement from Fidelity said:

“As a Massachusetts-based company with a proven history of doing what is in the best interests of our customers for more than 75 years, we look forward to continuing our respectful dialogue with policymakers to ensure responsible access with all appropriate consumer protections.” and to provide educational advice to plan sponsors when considering offering this innovative product. In line with our ongoing dialogue with regulators and policymakers, we will respond directly.”

Source: Crypto News Deutsch

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