US senators are for the second time calling on financial giant Fidelity to reconsider offering Bitcoin (BTC) as an investment in 401(k) retirement accounts.
In a letter to Fidelity CEO Abigail Johnson, US Senators Richard Durbin, Elizabeth Warren and Tina Smith say the recent FTX crypto exchange collapse underscores their position that Bitcoin is too risky a bet for workers’ retirement investments.
The senators had previously opposed the move when Fidelity announced the Bitcoin offering in April.
“In light of the recent stunning events in the digital asset market, we write today as a follow-up to our previous letter sent on July 26, 2022. Once again, we strongly urge Fidelity Investments to reconsider its decision to allow 401(k) plan sponsors to expose plan participants to Bitcoin. Since our previous letter, the digital asset industry has only grown more volatile, tumultuous, and chaotic—all features of an asset class no plan sponsor or person saving for retirement should want to go anywhere near.”
They claim a handful of young and charismatic people in the crypto space have manipulated Bitcoin’s price. They point to Bitcoin’s value collapsing by more than 20% after the FTX collapse.
“The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear the digital asset industry has serious problems. The industry is full of charismatic wunderkinds, opportunistic fraudsters, and self-proclaimed investment advisors promoting financial products with little to no transparency. 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.”
The senators say there is already a crisis facing retiree savings, and adding more risky investments could exacerbate the situation. Fidelity is home to workplace retirement accounts of 32 million Americans and 22,000 employers.
“In light of these risks and continuous warning signs, we again strongly urge Fidelity Investments to do what is best for plan sponsors and plan participants—seriously reconsider its decision to allow plan sponsors to offer Bitcoin exposure to plan participants. 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. Any investment strategy based on catching lightning in a bottle, or motivated by the fear of missing out, is doomed to fail.”
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