Lawmakers Wants Fidelity to Reconsider its BTC 401(k) Investment

Fidelity Investments Chief Executive Officer (CEO) Abigail Johnson has been approached by United States senators Elizabeth Warren, Tina Smith, and Richard Durbin to reconsider its plans of offering a Bitcoin (BTC) related 401(k) retirement product after the FTX liquidity crisis. In the letter sent to Johnson, Warren, Smith, and Durbin have pointed out the implosion of FTX as a reason why their concerns should be considered. 

“The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear the digital asset industry has serious problems,” the letter stated.

These senators made their argument on the basis that BTC is being manipulated citing “charismatic wunderkinds, opportunistic fraudsters, and self-proclaimed investment advisors” as key players in this aspect. Markedly, this will be the second time that Warren and Smith will raise concerns about the Fidelity investment BTC integration plan.

Warren And Smith Writes to Fidelity CEO

In May, the two senators sent a letter to Fidelity CEO talking about how the U.S. government is skeptical about the addition of BTC in retirement savings.

Fidelity Investment had planned to allow retirement saving investment of up to 20% in BTC citing increasing demand from crypto enthusiasts. Warren and Smith disagreed in this regard saying that there was insufficient client demand at that time.  

Both senators were concerned with the fact that “crypto assets carry significant risks of fraud, theft, and loss.” Other tenable reasons at that time were extreme volatility and high speculation in cryptocurrencies, custodial and recordkeeping difficulties as well as legal actions which could result from the offering. 

Clearly stated in the letter, the senators said “In short, 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.” 

In contradiction, a few months ago, three Republican U.S. Senate members identified as Pat Toomey, Tim Scott, and Peter Meijer submitted a draft bill that encourages investment managers to offer not only BTC but other cryptocurrencies as well In 401(k) retirement plans. They dubbed the draft bill the “Retirement Savings Modernization Act,” which according to them, will help expand America’s retirement savings plan.