US Senator Dick Durbin Criticizes Fidelity’s Inclusion Of Bitcoin In 401(k) Plans

By Kevin • July 28, 2022 3:19 pm • Comments

It seems that there is a growing number of members in Congress that have become increasingly annoyed about the fact that Fidelity has plans to include Bitcoin in its 401(k) plans.

Fidelity is one of the largest providers of retirement plans in the country and its decision to include Bitcoin would mean major changes for the crypto industry as this would mean a massive amount of new capital that would enter the market.

With that being said, U.S. Sen. Dick Durbin (D-Illinois.), Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn) are all now raising concerns about this and are claiming that this will expose many workers to an extremely volatile asset class.

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As a result, the senators have already submitted a letter to Fidelity to question the “appropriateness” of this new upcoming plan.

Of course, the crypto community disagrees and states that the new plan is just an additional option and that it should be up to the individual to control how they invest their capital.

CoinDesk reports:

The letter, addressed to Fidelity Investments CEO Abigail Johnson, criticizes the firm’s decision to offer workers the option to invest in an “untested, highly volatile asset like bitcoin.”

In April, U.S.-based financial services firm Fidelity Investments announced it would allow investors to put bitcoin (BTC) into 401(k) retirement plans later this year, capping bitcoin holdings at 20% of an account’s value.

In May, Warren cosigned a similar letter with Smith asking Fidelity about the “appropriateness” of its plans in May.

Both letters echo concerns raised by the Labor Department about the appropriateness of the token as a store of value.

“We have grave concerns with what Fidelity has done,” Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, told the Wall Street Journal in April.

Fidelity’s retirement accounts are valued at around $2.4 trillion in financial capital which goes to show how significant this change really is.

In comparison, the current cap of the crypto market is only around $1 trillion which is much less.

The move is expected to spur more lawmakers to focus on the growing crypto industry and will probably create a sense of urgency for more regulations.

At least, that is what many investors expect based on the recent Congressional hearings that have been hosted in the past month.

CoinDesk concludes:

Fidelity’s retirement accounts constitute a significant share of the retirement fund market. In 2020 the firm’s accounts held an estimated $2.4 trillion in 401(k) assets, or more than a third of the market at the time, according to research firm Cerulli Associates.

The letter comes at a time when Congress is paying more attention to cryptocurrencies now than ever before. On July 27, The Senate Judiciary Committee, Senate Banking Committee and House Financial Services Committee held three separate hearings on various aspects of the crypto industry.

Durbin previously implored U.S. regulators to “learn the truth” about the crypto industry as he criticized crypto mining initiatives in a mid-July tweet. “Families and businesses in America will pay the price for crypto’s mining ventures,” Sen. Durbin wrote.

Despite the concerns that Congress may have, it seems appropriate though that the people should have the freedom to do what they want with their 401(k) accounts.

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