Senator Warren voiced concerns about the “risky and speculative” decision taken by Fidelity to include BTC accounts in 401(K) retirement programs.
Senators’ Letter Expresses Concerns
Last week, Fidelity Investment announced that it would be allowing 401(K) holders to be able to add a Bitcoin account to their retirement plans. Responding to the announcement, Sen. Warren and Sen. Tina Smith (D-Minn) expressed their concerns via a letter addressed to the company’s CEO, Abigail Johnson. The letter claimed a conflict of interest since Fidelity had started mining Bitcoins back in 2017. It also referenced the Labor Department statement from March that had pointed out “serious concerns” about the inclusion of cryptocurrencies in retirement programs.
Quoting from the letter,
“When Fidelity made its decision to allow sales of bitcoin in retirement accounts, how did the company address its own conflicts of interest, given that the company now is both a bitcoin miner and a purveyor of bitcoin? Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans’ retirement savings.”
They asked about the steps that the organization is taking to address the loss of funds risks due to the BTC’s volatility. The letter also questioned the Fidelity CEO about how the company plans to address concerns of fraud and theft and matters of customer fees incurred for investing in BTC.
The Musk Factor
Furthermore, the senators’ letter also questioned the rationality of the move, citing the volatility of bitcoin’s price. The letter also specifically named Elon Musk as one of the powerful influencers who could easily affect the price of the crypto through a single tweet. It is interesting to note that Fidelity is one of the investors who are backing Musk’s Twitter bid. The billionaire entrepreneur has recently made news with his $44 billion play for the social media network. Fidelity and other prominent investors like Sequoia Capital, Andreessen Horowitz, Binance, and others have contributed around $7 billion of funding for the takeover.
In response, the Fidelity team released a media statement, which read,
“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 policy makers to responsibly provide access with all appropriate consumer protections and educational guidance for plan sponsors as they consider offering this innovative product. Consistent with our ongoing dialogue with regulators and policy makers, we will respond directly.”
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.