Several US senators have called on Fidelity Investments to reconsider allowing bitcoin in 401(k) retirement plans. “The recent implosion of cryptocurrency exchange FTX has made it clear that there are serious problems in the digital asset industry,” the lawmakers told Fidelity CEO Abigail Johnson.
US senators want Fidelity to stop offering bitcoin in retirement plans
Three US senators sent a letter to Fidelity Investments CEO Abigail Johnson on Monday regarding the financial services firm’s bitcoin offerings in 401(k) retirement plans. On the letter, Senators Elizabeth Warren (D-MA), Richard J. Durbin (D-IL) and Tina Smith (D-MN).
Reiterating their concerns about Fidelity allowing bitcoin exposure in retirement plans, the lawmakers emphasized: “Once again, we strongly urge Fidelity Investments to strongly urge 401(k) plan sponsors to expose plan participants to bitcoin.” We urge you to reconsider your decision to allow
He elaborated: “Since our last letter, the digital asset industry has only grown more volatile, volatile and chaotic – all characteristics of an asset class with nowhere to go for a plan sponsor or a person saving for retirement. Do not want.” The senator continued:
The recent implosion of cryptocurrency exchange FTX has made it clear that there are serious problems in the digital asset industry. The industry is filled with charismatic miracles, opportunistic fraudsters, and self-proclaimed investment advisors who promote financial products with little or no transparency.
Crypto exchange FTX filed for Chapter 11 bankruptcy on November 11. The firm allegedly misappropriated client funds and is currently under investigation by multiple US authorities, including the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Commodity Exchange. Futures Trading Commission (CFTC).
“As a result, the ill-advised, misleading and potentially illegal actions of some individuals have a direct impact on the valuation of bitcoin and other digital assets,” the lawmakers warned. “While the full extent of the damage caused by FTX continues to unfold, the contagion is being felt across the broader digital asset market. Bitcoin is no exception.”
“In light of these risks and the continuing warning signs, we again urge Fidelity Investments to do what is best for plan sponsors and plan participants – in its decision to allow plan sponsors to offer bitcoin exposure to plan participants.” seriously reconsider,” lawmakers told Johnson, elaborating:
By many measures, we are already in a retirement security crisis, and it shouldn’t be made worse by putting retirement savings at unnecessary risk. Any investment strategy based on catching lightning in a bottle or driven by fear of missing out is doomed to fail.
Fidelity’s decision to offer bitcoin investments in 401(k) plans has upset the US Department of Labor. “We have serious concerns about what Fidelity has done,” said Ali Khawar, acting assistant secretary of the Labor Department’s Employee Benefits Security Administration. Treasury Secretary Janet Yellen has also warned that crypto is “very risky”, stressing that it is unsuitable for most retirement savers.
Senator Warren sent a letter to Johnson earlier this year seeking answers about the financial firm’s decision to allow bitcoin exposure in retirement products. In September, several US lawmakers introduced a bill called the Retirement Savings Modernization Act to allow workers to “diversify assets” in 401(k) plans.
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