US senators demanded that Fidelity remove the first cryptocurrency from retirement savings plans due to high volatility and regulatory uncertainty.
Senators Dick Durbin, Tina Smith and Elizabeth Warren sent a letter to Fidelity Investments CEO Abigail Johnson. They demanded an explanation why a company that enjoys a good reputation in the financial sector offers pension plan participants access to bitcoin. Politicians consider such an initiative reckless, calling bitcoin a volatile, illiquid and speculative asset. They explained that 401(k) pension plans are characterized by constant contributions and stable returns, which is not the case with bitcoin.
Legislators recognize that blockchain technology has promising prospects and great potential for creating innovative applications. However, users should be wary of the risks associated with bitcoin and other digital assets, politicians noted, recalling the fall of BTC. In November 2021, its rate reached a record high of $69,000, and fell below $18,000 in June.
“People who are trying to save for retirement and investing hard-earned dollars in bitcoin mistakenly believe that their situation is sustainable. Self-proclaimed cryptocurrency investment experts, actors, and even some Washington lawmakers have led people to believe that their bitcoin investment will pay off handsomely. Some go so far as to call bitcoin a bailout against inflation,” the senators wrote in a letter to Fidelity Investments.
Fidelity only allows clients to invest in bitcoin up to 20% of their investment portfolio and publishes a disclaimer on their website. This suggests that the company is well aware of the risks of investing in digital assets, politicians say. They are sure that Americans already have many different ways to invest in bitcoin. Therefore, working family retirement accounts are not the place to experiment with unregulated assets that have not yet proven their worth.
Earlier, Fidelity’s initiative to include bitcoin in retirement accounts raised concerns from the US Department of Labor. The agency believes that the US pension system is not yet ready for innovation due to the lack of a clear legal framework governing cryptocurrencies.
Source: Bits
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