Fidelity Investments recently became the first major retirement-plan provider to allow investors to include a bitcoin account in their 401(k).
A senior administrator at the Labor Department stated that Fidelity Investments’ plan to allow clients to place bitcoin in their 401(k) plans jeopardizes Americans’ financial security.
Related: Fidelity To Allow Investors To Put Bitcoin In 401(k) Accounts
What Happened: “We have grave concerns with what Fidelity has done,” Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, stated in an interview with The Wall Street Journal.
Mr. Khawar’s group handles company-sponsored retirement programs inside the Labor Department. In the interview, he stated that he views cryptocurrency to be speculative. “There’s a lot of hype around ‘You have to get in now because you will be left behind otherwise,’” he mentioned.
In response to the Labor Department’s comments, Fidelity stated that its bitcoin offering “represents the firm’s continued commitment to evolving and broadening its digital assets offerings amidst steadily growing demand for digital assets across investor segments, and we believe that this technology and digital assets will represent a significant part of the financial industry’s future.”
Mr. Khawar said the Labor Department has similar concerns with an offering from ForUsAll Inc. This 401(k) provider announced last year a deal with the institutional arm of cryptocurrency exchange Coinbase Global Inc. (NASDAQ:COIN).
Another concern identified by the Labor Department concerning cryptocurrency investing is the ambiguity surrounding its regulation. Mr. Khawar believes bitcoin has intriguing use cases, but it needs to “mature” before individuals can put their retirement savings into it, including the development of consumer protections.
Photo by andre-francois-mckenzie via Unsplash
