Two U.S. senators, including Elizabeth Warren, have written to Fidelity Investments, asking for a response to the firm’s decision to allow bitcoin to be invested in 401(k) retirement plans. “Investing in cryptocurrencies is a risky and speculative gamble, and we fear that Fidelity will take on those risks with the retirement savings of millions of Americans,” the lawmakers wrote.

U.S. lawmakers worried about Fidelity allowing bitcoin to be invested in 401(k) plans

U.S. Senator Elizabeth Warren (D-MA) has written to Fidelity Investments CEO Abigail Johnson questioning the services giant’s plans to allow bitcoin to be invested in 401(k) accounts. The letter, dated May 4, was also signed by U.S. Senator Tina Smith (D-MN).

The lawmakers wrote:

We are writing to ask about the appropriateness of your company’s decision to add Bitcoin to its 401(k) investment plan menu, and the actions you will take to address the “significant risk of fraud, theft, and loss” that these assets pose.

The letter states that Fidelity’s announcement comes after the Department of Labor expressed “serious concerns” about cryptocurrency investment options in 401(k) plans, citing the “significant risks of fraud, theft, and loss” posed by cryptoassets.

Senators Warren and Smith emphasized:

In short, investing in cryptocurrencies is a risky and speculative gamble, and we fear Fidelity will take those risks with the retirement savings of millions of Americans.

The two senators went on to highlight Bitcoin’s volatility compared to S&P 500 stocks. They also noted that the cryptocurrency’s price was influenced by Tesla CEO Elon Musk’s tweet, “These volatility risks are exacerbated by the high concentration of Bitcoin ownership and mining.”

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The lawmakers also warned:

We are also concerned about Fidelity’s potential conflicts of interest and the extent to which they may have influenced the decision to offer bitcoin.

The letter cited Fidelity’s 2017 announcement that it had been mining cryptocurrencies. Since then, the services company has increased its cryptocurrency offerings, including its own cryptocurrency fund for wealthy clients.

In the latest announcement, the senators stated that “Fidelity has decided to go full speed ahead with supporting bitcoin investments,” claiming that the company is doing so “despite a lack of demand for this option — only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu.”

In all, the two senators asked Fidelity five questions and asked for answers by May 18. They wanted to know why Fidelity ignored the Labor Department’s crypto warnings, the details of the company’s bitcoin risk assessment, the fees customers would incur, how Fidelity resolved its own conflicts of interest, and how much the company was getting from crypto mining activities.

tags in this story

401(k) bitcoin, 401k crypto, 401k crypto, Abigail Johnson, bitcoin, crypto, cryptocurrencies, Fidelity, Fidelity Investments, Retirement Account Bitcoin, Senator Elizabeth Warren, Senator Tina Smith, U.S. Senator Elizabeth Warren

What do you think of Senator Elizabeth Warren questioning Fidelity’s decision to allow Bitcoin to be invested in retirement accounts? Let us know in the comments section below.

Kevin Helms

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

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