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Cryptocurrency for 401(k) Accounts – Fidelity Offers it as an Investment Option

Cryptocurrency for 401(k) Accounts – Fidelity Offers it as an Investment Option

Fidelity Investments, the company that has reported $11.3 trillion in assets under administration (AUA), has become the first retirement plan provider to offer cryptocurrencies as an investment option. Fidelity will make bitcoin led investment plans a reality by mid-2022 to its 23,000 employers using the account. This is a significant move as many views it as the mainstreaming of cryptocurrency. 

Although Fidelity Investments is currently evaluating how much plan participants will be allowed to put into Bitcoin, industry sources reveal it be around 20%. However, the US Department of Labour has cited severe concerns due to the high risks involved in offering bitcoin as an investment option in the 401(k) plans.

He remarked, “There is growing interest from plan sponsors for vehicles that enable them to provide their employees access to digital assets in defined contribution plans, and in turn from individuals with an appetite to incorporate cryptocurrencies into their long-term investment strategies.”

The cap on bitcoin investments being evaluated by employers

Fidelity will allow investors eligible for the bitcoin-fuelled retirement plans to allocate up to 20% of their accounts to cryptocurrency. The cap for the same is currently being determined by the employer. The fees for the assets stored in the bitcoin accounts will range from 0.75% and 0.90%. Additional costs such as per-trade fees might also be applicable on such accounts. 

This move will allow Fidelity account holders to invest in bitcoin- a massive benefit for first-time investors since now they don’t have to make a separate account on crypto exchange for the same. It will boost the acceptance and adoption of cryptocurrency and enable its 23,000 users to take up bitcoin as an alternative investment option. 

Around Fidelity’s history of introducing and boosting crypto adoption, Fidelity first launched their first regulated offering in Canada in November 2021. This unit offered bitcoin custody and trading for institutional investments. They launched two publicly traded funds on the Toronto Stock Exchange in December 2021. More so, Fidelity introduced two similar offerings in Switzerland and Germany. 

Department of Labour has expressed some serious concerns 

The US Department of Labour has cited some serious concerns regarding cryptocurrency’s volatile and dynamic nature. They have also stressed formulating a rock-solid plan that includes the risk around such investments as the speculative and ever-changing crypto prices and the worrisome attitude of the regulatory bodies. 

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