Fidelity Investments Will Offer Bitcoin Inclusion in Its 401(k) Accounts

Investors can use part of their savings to invest in the world’s largest cryptocurrency, if their employers allow.

Apr 26, 2022 at 7:01 a.m. UTC
Updated Apr 26, 2022 at 7:46 p.m. UTC

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

U.S.-based financial services firm Fidelity Investments will allow investors to put bitcoin (BTC) into their 401(k) retirement savings accounts later this year, the firm said on Tuesday.

Employers could place a ceiling on the amount of savings earmarked for bitcoin, with the maximum cap expected to be no more than 20%. However, the move would allow several first-time investors to gain exposure to bitcoin without having to make a separate account on a crypto exchange.

A 401(k) account is a company-sponsored retirement plan in the U.S. to which employees can contribute income while employers may match contributions. Employees get a tax break on the money they contribute, while contributions are automatically withdrawn from employee paychecks and invested in the funds of their choosing.

Fidelity’s retirement accounts are big business: They held an estimated $2.4 trillion in 401(k) assets in 2020, or more than a third of the market at the time, as per research firm Cerulli Associates. Fidelity CEO Abby Johnson is scheduled to speak at Consensus 2022 in June.

Fees on the bitcoin investments in Fidelity’s 401(k) accounts would range between 0.75% and 0.90% – depending on the amount and employer – and held on its own custody platform. An additional trading fee would be levied, which remains undisclosed at writing time. Fidelity further plans to create educational materials for investors.

Business analytics firm MicroStrategy (MSTR) is said to have already signed on to the plan. The firm holds billions of dollars in bitcoin and its founder, Michael Saylor, is a staunch backer – often tweeting outlandish takes about the asset.

The move is the latest in the line of bitcoin-centric products and offerings by Fidelity, which was one of the first major firms to warm up to the then-rising asset class in 2018.

The Wall Street Journal and The New York Times earlier reported the news.

In November, Fidelity launched Canada’s first regulated offering that offered bitcoin custody and trading services for institutional investors in the country. It then launched two publicly traded bitcoin funds in December on the Toronto Stock Exchange. This year, Fidelity launched similar products in Switzerland and Germany.

Meanwhile, not everyone is on board with firms offering bitcoin exposure in their 401(k) offerings.

In March 2022, the U.S. Labor Department warned in a directive that cryptocurrencies were speculative and volatile trading investments with inflated valuation. The agency expressed “serious concerns” about providers offering cryptocurrencies in retirement plans.

The agency stressed at the time that providers must offer adequate information to potential investors about the risks involved in cryptocurrency investing, including the volatile prices and the ever-changing regulatory environment.

Bitcoin was trading at just over $40,500 at time of writing, and was up 3.85% in the past 24 hours.

UPDATE (April 26, 12:42 UTC): Updates sourcing throughout.

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Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

Shaurya is an analyst/editor for CoinDesk's markets team in Asia.

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