Senators in the United States want Fidelity to stop offering bitcoin as an investment option in retirement plans.
Monday, three senators from the United States wrote a letter to the chief executive officer of Fidelity Investments, Abigail Johnson, inquiring about the availability of bitcoin investments under 401(k) pension plans. Tina Smith (D-WV), Elizabeth Warren (D-MA), and Richard J. Durbin (D-IL) were the senators who put their names on the letter (D-MN).

The lawmakers restated their concerns about Fidelity's decision to permit bitcoin exposure in retirement plans, and they emphasized the following: "Once again, we strongly urge Fidelity Investments to reconsider its decision to allow 401(k) plan sponsors to expose plan participants to bitcoin."

They provided the following information: "Since our previous letter, the digital asset industry has only grown more volatile, tumultuous, and chaotic — all characteristics of an asset class no plan sponsor or person saving for retirement should want to go anywhere near." Following that, the senators continued:

The recent failure of the cryptocurrency exchange known as FTX has made it clearly evident that the digital asset market is struggling with a number of major issues. There are a lot of charming wunderkinds, opportunistic scammers, and self-proclaimed investment gurus in this market, and they all promote financial solutions that have very little to no transparency.

On November 11, the cryptocurrency exchange FTX filed for bankruptcy under Chapter 11. It has been alleged that the company improperly handled the funds of its customers, and several authorities in the United States, including the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission, are currently investigating the matter (CFTC).

Legislators issued a stern warning that "the ill-advised, misleading, and perhaps criminal conduct of a few have a direct influence on the price of bitcoin and other digital assets." "While the full amount of the harm inflicted by FTX continues to unravel, the contagion is beginning to be felt across the greater digital asset market. " Bitcoin is not an exception to this rule."

"In light of these risks and continuous warning signs, we again strongly urge Fidelity Investments to do what is best for plan sponsors and plan participants — seriously reconsider its decision to allow plan sponsors to offer bitcoin exposure to plan participants," the lawmakers wrote to Johnson. They elaborated on their statement as follows: "In light of these risks and continuous warning signs, we again strongly urge Fidelity Investments to do what is best for plan sponsors and plan participants."

It is already clear that we are in the midst of a crisis regarding the security of retirement, and the situation should not be made any more precarious by putting retirement savings at unnecessary risk. Any investment strategy that is based on trying to capture lightning in a bottle or that is motivated by the fear of missing out is destined to fail.

The decision made by Fidelity to make bitcoin investments available to participants in 401(k) plans has caused concern within the United States Department of Labor. Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration within the United States Department of Labor, stated that "We have grave concerns with what Fidelity has done." Treasury Secretary Janet Yellen has also issued a warning that crypto is "very risky," highlighting the fact that it is not appropriate for the majority of people saving for retirement.

Before the end of this year, Senator Warren had already written a letter to Johnson in which she demanded explanations regarding the decision made by the financial company to allow bitcoin exposure in retirement products. "Workers to diversify assets" in 401(k) plans was one of the goals of a bill that was introduced in September by a number of lawmakers in the United States under the name Retirement Savings Modernization Act.