US Senators Urge Fidelity to Stop Offering Bitcoin in 401(k) Plans Citing Collapse of FTX, ‘Serious Problems’ in Crypto Industry

US Senators Urge Fidelity to Stop Offering Bitcoin in 401(k) Plans Citing Collapse of FTX, ‘Serious Problems’ in Crypto Industry

Several U.S. senators have called on Fidelity Investments to reconsider allowing bitcoin in 401(k) retirement plans. “The recent implosion of FTX, a cryptocurrency exchange, has made it clear that the digital asset industry is in serious trouble,” lawmakers told Fidelity CEO Abigail Johnson.

US senators want Fidelity to stop offering Bitcoin in retirement plans

Three U.S. senators sent a letter to Fidelity Investments CEO Abigail Johnson on Monday regarding the financial services company’s bitcoin offerings in 401(k) retirement plans. The letter was signed by Senators Elizabeth Warren (D-MA), Richard J. Durbin (D-IL) and Tina Smith (D-MN).

Reiterating their concerns about Fidelity’s exposure to bitcoin in pension plans, lawmakers stressed, “Once again, we urge Fidelity Investments to reconsider its decision to allow 401(k) plan sponsors to expose plan participants to bitcoin.”

They detailed: “Since our previous letter, the digital asset industry has only become more volatile, tumultuous and chaotic – all hallmarks of an asset class that no plan sponsor or saver for the retirement should want to approach.” The senators continued:

The recent implosion of FTX, a cryptocurrency exchange, has made it clear that the digital asset industry is in serious trouble. The industry is full of charismatic prodigies, opportunistic fraudsters and self-proclaimed investment advisers promoting financial products with little or no transparency.

Crypto exchange FTX filed for Chapter 11 bankruptcy on November 11. The company allegedly mismanaged customer funds and is currently under investigation by several US authorities, including the Department of Justice (DOJ), Securities and Exchange Commission (SEC) and Commodity. Futures Commission (CFTC).

“As a result, the misguided, deceptive and potentially illegal actions of a few have a direct impact on the valuation of bitcoin and other digital assets,” lawmakers warned. “As the full extent of damage from FTX continues to unfold, the contagion is being felt across the entire digital asset market. Bitcoin is no exception.

“In light of these risks and the continued warning signs, we again urge Fidelity Investments to do what is best for plan sponsors and plan participants – seriously reconsider its decision to allow plan sponsors to offer exposure to bitcoin to plan participants,” lawmakers told Johnson. , working out:

In many ways, we are already in a retirement security crisis, and it should not be made worse by exposing retirement savings to unnecessary risk. Any investment strategy based on catching lightning in a bottle or driven by the fear of missing out is doomed to failure.

Fidelity’s decision to offer bitcoin investments in 401(k) plans has troubled the US Department of Labor. “We are very concerned about what Fidelity has done,” said Ali Khawar, acting assistant secretary for the Department of Labor’s Benefits Security Administration. Treasury Secretary Janet Yellen also warned that crypto is “very risky,” stressing that it is not suitable for most retirement savers.

Senator Warren previously sent a letter to Johnson earlier this year asking for answers about the financial firm’s decision to allow exposure to bitcoin in retirement products. In September, a number of US lawmakers introduced a bill called the Retirement Savings Modernization Act to allow “workers to diversify assets” in 401(k) plans.

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What do you think of US senators urging Fidelity to reconsider allowing bitcoin investments in 401(k) plans? Let us know in the comments section below.

Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

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