Dick Durbin Joins US Senators Criticizing Fidelity’s Plan to Include Bitcoin in 401(k) Plans

A joint letter with Sen. Tina Smith and Sen. Elizabeth Warren calls Fidelity’s plans “immensely troubling.”

AccessTimeIconJul 28, 2022 at 6:00 p.m. UTC
Updated Jul 28, 2022 at 8:10 p.m. UTC

Elizabeth Napolitano is a news reporter at CoinDesk.

U.S. Sen. Dick Durbin (D-Ill.) has joined the Labor Department and fellow senators Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.) in flagging concerns over Fidelity Investment's plan to offer bitcoin (BTC) as an investment option for its 401(k) managed accounts.

  • The letter, addressed to Fidelity Investments CEO Abigail Johnson, criticizes the firm’s decision to offer workers the option to invest in an “untested, highly volatile asset like bitcoin.”
  • In April the U.S.-based financial services firm announced it would allow investors to put bitcoin (BTC) into 401(k) retirement plans later this year, capping bitcoin holdings at 20% of an account’s value.
  • In May, Warren cosigned a similar letter with Smith asking Fidelity about the “appropriateness” of its plans.
  • Both letters echo concerns raised by the Labor Department about the appropriateness of the token as a store of value. “We have grave concerns with what Fidelity has done,” Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, told the Wall Street Journal in April.
  • When reached for comment, a company spokesperson said Fidelity is "proud of the Digital Assets Account as a responsible solution to meet the demands of mainstream interest" and is on track to launch its first plans this fall. The spokesperson added that Fidelity is continuing to work directly with policymakers to answer their questions.
  • Fidelity’s retirement accounts constitute a significant share of the retirement fund market. In 2020, the firm’s accounts held an estimated $2.4 trillion in 401(k) assets, or more than a third of the market at the time, according to research firm Cerulli Associates.
  • The letter comes at a time when Congress is paying more attention to cryptocurrencies than ever before. On July 27, the Senate Judiciary Committee, Senate Banking Committee and House Financial Services Committee held three separate hearings on various aspects of the crypto industry.
  • Durbin previously implored U.S. regulators to “learn the truth” about the crypto industry as he criticized crypto-mining initiatives in a mid-July tweet. “Families and businesses in America will pay the price for crypto’s mining ventures,” he wrote.

UPDATE (July 28, 20:10 UTC): Added response from Fidelity in fifth bullet point.

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Elizabeth Napolitano is a news reporter at CoinDesk.

CoinDesk - Unknown

Elizabeth Napolitano is a news reporter at CoinDesk.

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