Three senators chastised Fidelity for offering a bitcoin 401(k) option claiming it is too volatile and untested to be used as a retirement savings tool.
- U.S. Senators wrote an open letter to the CEO of Fidelity regarding its bitcoin 401(k) plan.
- Senators condemned the financial institution for offering bitcoin as an optional retirement investment strategy.
- The senators also recognize the struggles of Americans trying to save for retirement but can’t seem to understand traditional finance is the problem.
An open letter from three U.S. Senators was sent to the CEO of Fidelity Investments to condemn the company’s recent launch of a bitcoin 401(k) retirement plan.
Senators Elizabeth Warren, Richard Durbin and Tina Smith called Fidelity’s decision to offer exposure to bitcoin through retirement accounts “immensely troubling.”
The senators argue that bitcoin is “a volatile, illiquid, and speculative asset” unfit for the retirement accounts of U.S. citizens. The legislators continued to explain some statistics in detailing the small amount of money that is, on the median, held on these retirement accounts –– $33,472.
Warren and her colleagues then proceed to paint a picture of Americans in need of their retirement as they are living longer than ever before and are likely to outlast their retirement savings.
“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?,” reads the letter.
It seems that while the senators are capable of understanding there is a distinct lack of savings available to a generation of workers that will progressively reach a higher age than their predecessors, they lack the ability to spot its true cause. As is often the case in politics, while it is easy to point out a problem, the move away from the backboning cause – of which traditional finance infrastructures are arguably a part – is often looked down upon to maintain the status quo.
Fidelity is providing the optionality of escape from a doomed system for its customers. Additionally, as the senators pointed out in their letter, Fidelity also caps retirement investment allocations to bitcoin. By doing this, Fidelity is effectively providing the optionality of bitcoin while preventing investors from placing all of their funds in that basket.
Fidelity researched Bitcoin, understood its value and began offering a product with capped exposure to make sure any volatility felt by the market in the short-term was not detrimental to anyone’s livelihood. The investment manager also clearly outlines that bitcoin is not a short-term bet and that investors should develop long-term investment strategies.