A few months ago, Fidelity – one of the biggest retirement account firms in the world – announced that it was going to allow customers to put some of their retirement savings into digital currencies like bitcoin and Ethereum.
Fidelity Rubs Senators the Wrong Way
The news saw many traders and investors hitting the roof. This would surely make all crypto legitimate and mainstream, but it also rubbed a lot of people the wrong way, especially democrat senators. They scoffed at the idea that money which is typically used when one is old, infirm, or cannot work could be put in what they considered to be a speculative, risky, and untrustworthy asset class, and they took serious issue with Fidelity and its latest offerings.
Among the senators particularly concerned are (no surprise, here) Elizabeth Warren of Massachusetts; Richard Durbin of Illinois; and Tina Smith of Minnesota. All have penned a letter together and sent it to Fidelity asking what the company is thinking and requesting that they reverse the decision as soon as possible.
The letter states:
As one of the largest 401(k) providers, Fidelity (must be aware) of the precarious position of Americans’ retirement savings. While the average 401(k) balance is $129,157, the median balance for 401(k) accounts is just $33,472. With Americans living longer today than ever before, it is apparent that too many retirees are likely to outlast their balances during their golden years… This begs the question: when saving for retirement is already a challenge for so many Americans, why would Fidelity allow those who can save to be exposed to an untested, highly volatile asset like bitcoin? Perhaps most troubling is that in pointing to the risks of investing in bitcoin on its website and planning to cap plan participants’ bitcoin exposure to 20 percent, Fidelity is acknowledging it is aware of the dangers associated with investing in bitcoin and digital assets yet is deciding to move ahead anyway.
Dave Gray – the head of workplace retirement offerings with Fidelity – struck back at the letter, saying:
There is growing interest from plan sponsors for vehicles that enable them to provide their employees access to digital assets in defined-contribution plans, and in turn from individuals with an appetite to incorporate cryptocurrencies into their long-term investment strategies.
Was Now the Right Time?
While we cannot deny that Fidelity is moving in an innovative direction, there is also some concern that the crypto world continues to sink into perdition, and thus maybe right now wasn’t the best time to give retirees the chance to invest in crypto.
Bitcoin, for example, has lost more than 60 percent of its value over the course of a few months and has fallen from $68,000 to about $23,000 at press time, and the crypto world, overall, has lost close to $2 trillion in valuation.