Senator Elizabeth Warren Expresses Concern Over Fidelity’s Bitcoin Pension Plan

Senator Elizabeth Warren voiced concerns about Fidelity Investments' plan calling it "a risky and speculative gamble."

By Shomik Sen Bhattacharjee | Updated: 6 May 2022 17:24 IST

Senator Elizabeth Warren Expresses Concern Over Fidelity’s Bitcoin Pension Plan

Photo Credit: Reuters

Senator Elizabeth Warren leads inquiry into Fidelity's Bitcoin-backed retirement 401(k) account

Highlights

The senators claim Fidelity ignored a US Department of Labor warning
Fidelity has been asked to respond to the questions by May 18
Fidelity manages some $4.2 trillion in assets

US-based retirement plan provider Fidelity must address risks and potential conflicts of interest related to its plan to allow Bitcoin investment in 401 (k) retirement accounts, according to Senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, who have asked for answers from the financial services heavyweight before May 18. Fidelity announced last week that it would allow people to devote as much as 20 percent of their retirement plan to Bitcoin towards the end of the year.

Massachusetts Senator Elizabeth Warren and Minnesota Senator Tina Smith sent a letter to Fidelity's Chief Executive Officer, Abigail Johnson, earlier this week asking, among other things, why it didn't heed earlier concerns by the Department of Labor on the issue of including cryptocurrencies in 401(k) retirement accounts.

"Why did Fidelity ignore DOL's 'serious concerns regarding the prudence of a fiduciary's decision to expose 401(k) plan's participants to direct investments in cryptocurrencies?" the senators wrote.

[Sponsored] Samsung Galaxy S24: The Ultimate Camera Phone With Smarter On-Device AI

Fidelity's push to extend the investment into 401(k) was said to be based on a growing demand from employees. Despite the firm clarifying that it will charge no fees for the service, the Senators still demanded to know if the proposed customers would need to worry about any fees at all.

In the prior announcement, Fidelity said it would only permit about 20% of a particular client's portfolio to be invested in digital currencies, however, the claim of popular demand has mainly been faulted by the Senators who wrote, "Despite a lack of demand for this option — only 2 percent of employers expressed interest in adding cryptocurrency to their 401(k) menu – Fidelity has decided to move full speed ahead with supporting Bitcoin investments."

Fidelity did not respond to the specific issues raised by the senators. But, in an email to CNN Business, a spokesman said that the company would respond directly to them.

Argentina's Central Bank Bars Banks From Offering Crypto Services

"As a Massachusetts-based company with a proven 75-plus-year history of doing what's in the best interest of our customers, we look forward to continuing our respectful dialogue with policymakers to responsibly provide access with all appropriate consumer protections and educational guidance for plan sponsors as they consider offering this innovative product," Fidelity wrote.

Are affordable smartwatches worth it? We discuss this on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

Affiliate links may be automatically generated - see our ethics statement for details.

Cryptocurrency Prices across Indian exchanges

Comments

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.