The US Department of Labor has expressed concern about Fidelity’s Bitcoin Offerings in 401(k)s.
Fidelity’s move to add Bitcoin to investors’ retirement 401(k) accounts aroused concern in the Ministry. While he sees the speculative nature of Bitcoin as a cause for concern as it is included in the retirement plan open to the average American, the authority said it has no intention of banning the asset in 401(k)s.
Concerns Regarding Cryptocurrency
Ali Khawar, deputy secretary of the Employee Benefits Security Administration, announced a day before Fidelity was announced that it would allow 401(k) clients to invest up to 20%.
Ali Khawar considered the cryptocurrency speculative, saying that “there is a lot of hype out there”. “You must enter now because otherwise you will be left behind,” he added. In his view, a 401(k) as a retirement fund for retirement savings should gravitate towards safe assets with much less volatility.
Another risk is regulatory uncertainty regarding digital assets. With an emphasis on consumer protection in such an area, Khawar said people need to “maturate” before investing their savings in it.
However, the official clarified that the department will not stop Fidelity from offering such an asset to its 401(k) clients, and it is up to employers to decide whether to invest in Bitcoin.
The Ministry’s Guide stated that employers offering cryptocurrencies should answer questions from regulators about how they can “balance their actions with duties of common sense and loyalty” under US pension law.
Responding to the concern from the Labor Department, Fidelity said that digital asset offerings will form a large part of the future of the financial industry. Dave Gray, head of workplace retirement offerings and platforms at Fidelity, has announced that other cryptocurrencies may be made available in the future.
Fidelity’s plan will be open to more than 20 million participants, and its first client came from software giant MicroStrategy, which holds around 130,000 BTC on its corporate balance sheet.