Fidelity, the nation’s largest provider of 401 (k) plans, said Tuesday that participants would be able to put some of their severance pay into Bitcoin-employers are willing to allow it. If not.
With this announcement, millions of people could approach direct investment in Bitcoin this summer without having to set up an account on the crypto exchange. However, regulators have already stated that they are skeptical of this idea. Last month, the Ministry of Labor, which oversees workplace retirement plans, said Said Look critically at plans to add digital assets to the investment menu.
According to research firm Cerulli Associates, Fidelity, which had $ 2.4 trillion in 401 (k) assets in 2020, or more than one-third of the market, Digital asset account Hold Bitcoin. Account fees range from 0.75 percent to 0.90 percent of assets, depending on several factors such as employer and investment amount. The company said additional transaction fees not yet disclosed would be “competitive prices.”
In an interview, Dave Gray, Head of Work Retirement Services and Platforms at Fidelity Investments, said in an interview, “How Bitcoin can be provided, or how digital assets can be delivered with a retirement plan, organic from plan sponsors. I’ve begun to hear that there is growing interest in it. ” ..
MicroStrategyAccording to Gray, the business analytics company has already signed on and Fidelity is in talks with other employers.
Digital asset accounts will be widely available later this year, according to Fidelity. It will be integrated into your 401 (k) investment menu, just like a traditional investment trust. Investors can choose, for example, to allocate a certain percentage of donations to their Bitcoin account. The percentage is limited. The employer sets the limit, but the platform does not allow more than 20% allocation, but that number is subject to change.
A Increasing number of traditional investment options Last year, those offering exposure to cryptocurrencies, including a series of exchange-traded funds, have recently hit the market. But Fidelity’s move is more impressive as it allows Americans to bet on emerging, highly volatile sectors with their sacred retirement.
The Ministry of Labor did not go until it banned crypto from the retirement plan when it was issued. Compliance support document Last month, however, it reminded the plan supervisor (often an employer who must act only in the best interests of the participating workers) responsible for choosing the “cautious” option. .. And it strongly suggested that cryptocurrencies do not yet appear to meet that standard.
“These investments pose significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft and loss,” the agency said in a compliance release. It added that it will carry out a research program aimed at planning to provide investments related to cryptocurrencies.
The agency said retired investors could misunderstand the risks of cryptocurrencies and expressed concern about valuation, storage and records management procedures.
In a letter to the Ministry of Labor this month, Fidelity said it did not provide guidance on how planners would address these concerns or fulfill their obligations when considering planned investments in cryptocurrencies. Said. The company urged the department to work with the plan supervisor to develop steps to fulfill these obligations.
“The Ministry of Labor has replaced what is legitimate to plan sponsor trustees with its own opinion on cryptocurrencies,” said Gray, who said Fidelity’s new account addressed many of the agency’s concerns. rice field.
Fidelity said, for example, that digital accounts are evaluated daily, maintained on their own management platform to ensure “institutional grade security”, and robust materials are incorporated into the offering.
However, there is little you can do about Bitcoin volatility. After peaking near $ 69,000 on November 9, recently about $ 40,000..
Fidelity, best known for its vast retirement business, was one of the earliest entrants in the field of cryptocurrencies. In 2018, we began offering trading and storage of digital assets to large institutional investors, and in 2020 we introduced a private Bitcoin fund for so-called accredited investors. The Fidelity Advantage Bitcoin ETF became available in Canada at the end of last year.