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Fidelity To Allow 401(K) Investments In BTC

Fidelity To Allow 401(K) Investments In BTC

Fidelity Investments is considering opening up an option where 401(K) holders will be able to add a Bitcoin account to their investments.

Save For Retirement In BTC

The largest provider of 401(K) plans, Fidelity Investments, has indicated that BTC would be included in its portfolio of offerings. According to initial reports, the company will allow investors to put a BTC account in their 401(K)s, making Fidelity the first major retirement plan provider to do so. 

Commenting on the decision, Head of Workplace Retirement Offerings and Platforms, Dave Gray said, 

“There is a need for a diverse set of products and investment solutions for our investors. We fully expect that cryptocurrency is going to shape the way future generations think about investing for the near term and long term.”

Around 23,000 companies use Fidelity to offer these retirement plans to their employees. Word around the block is that later in 2022, BTC will be integrated into the 401(K) investment menu, allowing employees to store upto 20% of their savings in Bitcoin. However, the upper cap could be adjusted and depends on the employer or the plan provider, who could choose to lower the percentage ceiling. The cryptocurrency chosen to be included in the fund is Bitcoin for now. However, other digital assets might be included in the plan in the future. 

Fidelity And Regulators

However, the proposal is not sitting right with the regulators. The Department of Labor is questioning the move to add digital assets to investment menus and warning plan overseers (employers) to act in the best interest of their employees. A compliance assistance document released by the Labor Department reads, 

“The Department is concerned about the reliability and accuracy of cryptocurrency valuations. Experts have described the question of how to appropriately value cryptocurrencies as complex and challenging…When plan fiduciaries, charged with the duties of prudence and loyalty, choose to include a cryptocurrency option on a 401(k) plan's menu, they effectively tell the plan's participants that knowledgeable investment experts have approved the cryptocurrency option as a prudent option for plan participants. This can easily lead plan participants astray and cause losses.”

Fidelity had previously faced the ire of the regulators when its proposal for a spot Bitcoin exchange-traded fund (ETF) was rejected by the US Securities and Exchanges Commission (SEC). However, the investment giant had better luck in Canada when it became the country’s first Bitcoin custodian after approval from the Investment Industry Regulatory Organization of Canada (IIROC). 

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