According to a report by Fidelity Investments, investors plan to allow investors to allocate a portion of their 401(k)s to Bitcoin later this year The Wall Street Journal.
Fidelity, which manages employee benefit programs for nearly 23,000 companies, is set to become the first major retirement plan provider to allow bitcoin exposure in retirement accounts. The company has $2.7 trillion in assets under management in its retirement savings arm alone.
“There is a need for a variety of products and investment solutions for our investors,” said Dave Gray, Fidelity’s head of workplace retirement offerings and platforms, according to the report. “We firmly believe that cryptocurrency will shape the way future generations think about investing in the short and long term.”
The plan calls for investors to have up to 20% of their retirement accounts allotted to Bitcoin, but plan sponsors could lower that threshold at their discretion. Gray reportedly said the offering will be limited to Bitcoin and will not consider other cryptocurrencies from the start.
The Boston-based company’s move follows cautionary comments from the U.S. Department of Labor (DOL) regarding adding bitcoin exposure to retirement plans.
In a March blog post, acting assistant secretary of the DOL’s Employee Benefits Security Administration, Ali Khawar, said the department had “serious concerns about proposed decisions to suspend participants’ direct investments in cryptocurrencies,” citing “serious risks” that such a move would entail Exposure can bring, including valuation concerns, impediments to making informed decisions, price volatility and an as yet unclear regulatory landscape in the country. The department argued that US President Biden’s recent executive order on bitcoin, cryptocurrency and central bank digital currency (CBDC) highlights these risks.
Despite the risks perceived by the DOL, Gray said so WSJ that Fidelity is seeing “increasing and organic interest from customers” – particularly those with younger employees.
Company employees who sign up for the new offering can not only transfer up to 20% of their account balance to a bitcoin account on Fidelity’s trading and custodial platform, but also invest up to the same amount of each paycheck contribution to bitcoin.
Fidelity launched a spot bitcoin exchange-traded fund (ETF) in Canada in December after a vain attempt to list such a product in the US with the Securities and Exchange Commission (SEC). keeps blocking offers investing directly in the asset.