Elizabeth Warren Expresses concern about Fidelity’s plan to offer Bitcoin in 401(k)s

Key Takeaways

  • In a joint letter with Sen. Tina Smith, Elizabeth Warren had described crypto investment as a “risky and speculative gamble”.
  • Earlier, US Labor department also raised concerns about Fidelity’s plan to offer bitcoin in 401(k)s
  • The letter asked Fidelity to reveal how it assesses risks of volatility, theft, fraud and the evolving regulatory environment 
  • Warren had earlier introduced a bill to block cryptocurrency firms from conducting business with sanctioned companies.

Sens. Elizabeth Warren of Massachusetts, along with Tina Smith of Minnesota wrote a joint letter addressed to Fidelity’s Chief Executive Abigail Johnson, raising questions over the company’s plan to let investors put bitcoin in their 401(k)s. Both of them, in their open letter, described crypto investments as a “risky and speculative gamble.”

“We are concerned that Fidelity would take these risks with millions of Americans’ retirement savings,” the letter reads. The senators’ further pointed out that Bitcoin’s extreme volatility is compounded by the fact that its price can move on the “whims” of a handful of powerful influencers.

Noting that  Fidelity has potential conflicts of interest, both Warren and Tina have also requested information on the extent to which those potential conflicts might have affected the decision to offer bitcoin. They pointed out that Fidelity might have a conflict offering bitcoin in retirement funds because it has mined bitcoin and offers a crypto fund for wealthy investors. In the letter dated Wednesday, the two Democrats also asked Fidelity to reveal how it assesses risks of volatility, theft, fraud, and the evolving regulatory environment and how it plans to address them by May 18.

Fidelity in a statement to the media on Thursday,responded  “As a Massachusetts-based company with a proven 75+ 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. Consistent with our ongoing dialogue with regulators and policymakers, we will respond directly.”

The senators’ letter comes at a time when Ali Khawar, acting assistant secretary of the Labor Department’s Employee Benefits Security Administration, has also expressed concerns about Fidelity’s plan to offer bitcoin in 401(k)s retirement plans. On April 26, Fidelity revealed that starting later this year, it will give the 23,000 companies that use it to administer their retirement plans the option to put bitcoin on the menu of investment options.

Sens. Warren and Smith are both members of Senate committees that have jurisdiction over matters that pertain to retirement. Ms. Smith serves on the Senate Committee on Health, Education, Labor, and Pensions, and Ms. Warren serves on the Special Committee on Aging.

This is not the first time Sens. Warren has been skeptical about cryptocurrency. In March this year, she introduced a bill to block cryptocurrency firms from conducting business with sanctioned companies. Warren has also been a strong proponent of the U.S. developing a central bank digital currency which many views as a means of restricting private cryptocurrencies and stable coins.

Saniya Raahath
Saniya Raahath

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