In a letter to Abigail Johnson, CEO of Fidelity, Senator Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, expressed their concern regarding the lack of clarification on the risks regarding Fidelity’s inclusion of Bitcoin (BTC) in their 401(k) retirement plans.
The two Senators have raised concerns about Fidelity Investments’ intentions, indicating that the US government is becoming increasingly concerned about Bitcoin (BTC) in retirement funds.
Fidelity had weighed in on client demand, regarding their inclusion of Bitcoin in their retirement plans. But the duo of Senators rebuked this point by saying,
“Despite a lack of demand for this option — only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu – Fidelity has decided to move full speed ahead with supporting Bitcoin investments.”
The letter also mentioned the significant risks of fraud, theft, and loss. The Senators cited a March statement from the Department of Labor (DOL) warning that large crypto investments in company-sponsored retirement funds might result in legal action.
The Senators compared Bitcoin’s market volatility with that of the S&P 500, stating that,
“Bitcoin had five days in the last year where it plunged by at least 10% (citing NPR). By comparison, stocks in the S&P 500 had only two such drops in the last 50 years.”
The Senators have put forward five questions to Fidelity, and have requested the answers by May 18th, 2022.
These questions include Fidelity’s reasons for ignoring the DOL’s comments, Fidelity’s risk assessment of providing Bitcoin (BTC) to its clients, their fee in the same regard, their earnings from crypto mining activities, and lastly, when exactly did Fidelity decide to allow Bitcoin (BTC) on retirement plans.
Fidelity had previously said that their fee will range from 0.75% to 0.90% of assets. it would also depend on the employer and also on the amount invested. According to the firm, a separate trading charge, which has yet to be decided, will be “competitively priced.”