3 Democratic senators urge Fidelity to reconsider bitcoin exposure in 401(k) plans

“The industry is full of charismatic wunderkinds, opportunistic fraudsters, and self-proclaimed investment advisors promoting financial products with little to no transparency,” the senators added. “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.”

Fidelity announced in April that it would begin allowing plan participants to invest as much as 20% of their retirement savings in the company’s Digital Assets Account, which holds bitcoin and short-term money market investments.

The letter follows up on a previous one the senators sent in July, which said “it seems ill-advised” for Fidelity “to endorse the use of such a volatile, illiquid, and speculative asset in 401(k) plans.”

Since July, bitcoin’s value has significantly decreased, the senators note.

“On July 26, one bitcoin was valued at $21,239. Today, bitcoin is valued at $16,884 — a two-year low,” Monday’s letter states.

Ms. Warren and Mr. Durbin sent a letter to Sam Bankman-Fried, founder and former CEO of FTX, and John Jay Ray III, the new CEO of FTX, on Nov. 16 asking for more information related to the company’s collapse. In that letter, they said the FTX developments “justify (their) long-standing concerns that the crypto industry ‘is built to favor scammers’ and ‘designed to reward insiders and to defraud mom-and-pop investors.'”

Monday’s letter reflects a similar sentiment.

“By many measures, we are already in a retirement security crisis, and it should not be made worse by exposing retirement savings to unnecessary risk,” the letter states. “Any investment strategy based on catching lightning in a bottle, or motivated by the fear of missing out, is doomed to fail.”

In a statement, Fidelity said: “Recent events in the digital assets industry have further underscored the importance of standards and safeguards. As a firm that has been serving customers in financial markets for over 75 years, Fidelity has always prioritized…

Read complete post here:
Source link