US Senators Urge Fidelity to Stop Offering Bitcoin in 401(ok) Plans Citing FTX Collapse, ‘Serious Problems’ in Crypto Industry

Several U.S. senators have known as on Fidelity Investments to rethink permitting bitcoin in 401(ok) retirement plans. “The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear the digital asset industry has serious problems,” the lawmakers advised Fidelity CEO Abigail Johnson.

US Senators Want Fidelity to Stop Offering Bitcoin in Retirement Plans

Three U.S. senators despatched a letter to Fidelity Investments CEO Abigail Johnson Monday relating to the monetary companies agency’s bitcoin offerings in 401(ok) retirement plans. The letter was signed by senators Elizabeth Warren (D-MA), Richard J. Durbin (D-IL), and Tina Smith (D-MN).

Reiterating their issues about Fidelity permitting bitcoin publicity in retirement plans, the lawmakers pressured: “Once again, we strongly urge Fidelity Investments to reconsider its decision to allow 401(k) plan sponsors to expose plan participants to bitcoin.”

They detailed: “Since our previous letter, the digital asset industry has only grown more volatile, tumultuous, and chaotic — all features of an asset class no plan sponsor or person saving for retirement should want to go anywhere near.” The senators continued:

The current implosion of FTX, a cryptocurrency change, has made it abundantly clear the digital asset business has severe issues. The business is stuffed with charismatic wunderkinds, opportunistic fraudsters, and self-proclaimed funding advisors selling monetary merchandise with little to no transparency.

Crypto change FTX filed for Chapter 11 bankruptcy on Nov. 11. The agency allegedly mishandled buyer funds and is at the moment being investigated by a number of U.S. authorities, together with the Department of Justice (DOJ), the Securities and Exchange Commission (SEC), and the Commodity Futures Trading Commission (CFTC).

“As a result, the ill-advised, deceptive, and potentially illegal actions of a few have a direct impact on the valuation of bitcoin and other digital assets,” the lawmakers warned. “While the full extent of the damage caused by FTX continues to unfold, the contagion is being felt across the broader digital asset market. Bitcoin is no exception.”

“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 advised Johnson, elaborating:

By many measures, we’re already in a retirement safety disaster, and it shouldn’t be made worse by exposing retirement financial savings to pointless threat. Any funding technique based mostly on catching lightning in a bottle, or motivated by the worry of lacking out, is doomed to fail.

Fidelity’s choice to supply bitcoin investments in 401(ok) plans has troubled the U.S. Department of Labor. “We have grave concerns with what Fidelity has done,” said Ali Khawar, performing assistant secretary of the Labor Department’s Employee Benefits Security Administration. Treasury Secretary Janet Yellen has additionally warned that crypto is “very risky,” emphasizing that it’s unsuitable for many retirement savers.

Senator Warren already despatched a letter to Johnson earlier this yr demanding solutions in regards to the monetary agency’s choice to permit bitcoin publicity in retirement merchandise. In September, plenty of U.S. lawmakers introduced a bill known as the Retirement Savings Modernization Act to permit “workers to diversify assets” in 401(ok) plans.

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