Senator Elizabeth Warren Demands Answers from Fidelity for Allowing Bitcoin in Retirement Plans – Featured Bitcoin News
Two US senators, including Elizabeth Warren, have sent a letter to Fidelity Investments demanding answers regarding the company’s decision to allow bitcoin investments in 401(k) retirement plans. “Investing in cryptocurrencies is risky and speculative betting, and we fear Fidelity is taking those risks with the retirement savings of millions of Americans,” the lawmakers wrote.
US Lawmakers Concerned About Fidelity Allowing Bitcoin Investments in 401(k) Plans
US Senator Elizabeth Warren (D-MA) has sent a letter to Abigail Johnson, CEO of Fidelity Investments, questioning the financial services giant’s plans to allow bitcoin investments in 401(k) accounts. The letter, dated May 4, is also signed by U.S. Senator Tina Smith (D-MN).
The lawmakers wrote:
We are writing to inquire about the propriety of your company’s decision to add bitcoin to its 401(k) investment plan menu and the steps you will take to address “significant risks of fraud, theft and loss” posed by these assets.
The letter notes that Fidelity’s announcement follows the Department of Labor’s expression of “serious concerns” about cryptocurrency investment options in 401(k) plans, citing “significant risks of fraud , theft and loss” posed by crypto assets.
Senators Warren and Smith pointed out:
In short, investing in cryptocurrencies is a risky and speculative gamble, and we fear Fidelity is taking those risks with the retirement savings of millions of Americans.
The two senators then highlighted bitcoin’s volatility relative to S&P 500 stocks. They also noted that the cryptocurrency’s price was influenced by tweets from Tesla CEO Elon Musk and that “the high owning and operating bitcoin exacerbates these volatility risks. ”
Lawmakers also warned:
We are also concerned about Fidelity’s potential conflicts of interest and the extent to which they may have affected the decision to offer bitcoin.
The letter refers to Fidelity’s 2017 announcement that it had been mining cryptocurrency. Since then, the financial services firm has stepped up its crypto offerings, including offering its own crypto fund to high net worth clients.
With the latest announcement, the senators said, “Fidelity has decided to move forward with supporting bitcoin investments,” saying the company is doing so “Despite the lack of demand for this option – only 2% of employers have expressed interest in adding cryptocurrency to their 401(k) menu.”
In conclusion, the two senators posed five questions to Fidelity and demanded answers by May 18. They want to know why Fidelity is ignoring the Department of Labor’s crypto warning, details of the company’s bitcoin risk assessment, the fees customers will incur, how Fidelity responds to its own conflicts of interest, and how much the company earned through crypto mining activities.
What do you think of Senator Elizabeth Warren asking Fidelity about its decision to allow bitcoin investments in retirement accounts? Let us know in the comments section below.
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