Senator Elizabeth Warren Leads Inquiry Into Fidelity's Bitcoin-Backed Retirement 401(k) Account
Godfrey Benjamin May 06, 2022 02:50
In the wake of the launch of a Bitcoin-focused 401(k) account in the United States by Fidelity Investments, two Senators have expressed concerns over the company’s latest products.
In the wake of the launch of a Bitcoin-focused 401(k) account- a retirement plan- in the United States by Fidelity Investments, two Senators - Elizabeth Warren of Massachusetts and Tina Smith of Minnesota, have expressed concerns over the company’s latest products and this was contained in a letter to the firm’s Chief Executive Officer, Abigail Johnson.
As contained in the Senator’s letter, a demand was placed on Abigail to explain some of the inherent risks that are associated with the launch of the Bitcoin-backed product to American workers. The senators demanded that Fidelity clarify the risks involved in the 401(k) investments and how the company will address these risks.
Additionally, the Senators demanded to know how the firm will address the susceptibility of Bitcoin to manipulation as well as “the additional Bitcoin risks identified by DOL, including the challenge for plan participants to make (an) informed investment.”
Fidelity’s push to extend the investment into 401(k) was said to be based on 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% of employers expressed interest in adding cryptocurrency to their 401(k) menu – Fidelity has decided to move full speed ahead with supporting Bitcoin investments.”
It is not uncommon to find some Senators expressing dissatisfaction about anything relating to Bitcoin, drawing on the fact that it is a Proof-of-Work (PoW) coin with a high Carbon footprint. With Fidelity's investment offering now being questioned, time will show whether true organic demands fueled the launch of the product or not.
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