US Lawmakers ‘Strongly Urge’ Fidelity to Reconsider its Bitcoin 401(k) Initiative

The American senators – Elizabeth Warren, Tina Smith, and Richard Durbin – advised Fidelity Investments to reconsider its decision to allow investors to add bitcoin to their retirement 401(k) plans.

One of the largest mutual fund companies in the US has heavily engaged in the crypto sector in the past few years. It recently considered providing bitcoin trading services to individual investors on its brokerage platform.

A Renewed Warning After FTX’s Fiasco

Fidelity Investments made the headlines in April by enabling investors to add bitcoin to their retirement 401(k) accounts. While the move triggered huge enthusiasm in the crypto community, it also unleashed some criticism.

Senators Warren and Smith were among those who questioned the move and cautioned Fidelity to weigh the risks.

“Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans’ retirement savings,” they said at the time.

In a recent letter, Senators Warren, Smith, and Durbin reaffirmed their position, urging the organization to reconsider its bitcoin endeavor. The lawmakers believe the recent collapse of FTX has made it “abundantly clear” that the crypto sector has severe problems and prominent entities, including Fidelity, should not push clients toward it:

“The industry is full of charismatic wunderkinds, opportunistic fraudsters, and self-proclaimed investment advisors promoting financial products with little to no transparency. As a result, the ill-advised, deceptive, and potentially illegal actions of a few have a direct impact on the valuation of Bitcoin and other digital assets.”

The politicians opined that the USA is already in a retirement security crisis, which could only be intensified if people allocate their savings to the digital asset market.

Fidelity Has a Long History With Crypto

One of the largest asset managers in the world dived into the world of crypto in 2014 when it began mining bitcoin, while four years later, it introduced its subsidiary, Fidelity Digital Assets.

The company has been quite active on the field this year, too. Apart from allowing investors to add BTC to their 401(k) retirement plans, it vowed to hire hundreds of specialists to support the firm’s crypto products and assist customers when dealing with them.

Several reports indicated that the entity is looking to offer bitcoin trading options to individual investors on its brokerage platform. One of the people to spread the rumor was Galaxy Digital’s CEO Mike Novogratz:

“A bird told me that Fidelity, a little bird in my ear, is going to shift their retail customers into crypto soon enough.”

Fidelity enabled its institutional clients to trade ether (ETH) in October by launching an Ethereum Index Fund. The feature is based on the “same operational excellence, robust security, and dedicated client service model provided for bitcoin investments.”

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