Employees who work for one of the 23,000 companies that use Fidelity’s 401 services will be allowed to allocate up to 20% of their portfolio to the world’s largest cryptocurrency, the company announced last week.
A recent poll by the Plan Sponsor Council of America found only 2% of the 63 employers surveyed would consider making cryptocurrency available in their plans.
Moreover, employers have a legal fiduciary duty to offer prudent investments to retirees, based on the Employee Retirement Income Security Act of 1974, which leads to more cautious decision-making.
Fidelity’s announcement came the month after the Labor Department fired a warning shot at retirement plan distributors.
institutional investors polled “would prefer to buy an investment product containing digital assets.” Dave Gray, Fidelity’s head of workplace retirement offerings and platforms, told the Wall Street Journal that Fidelity is seeing “growing and organic interest from clients” in cryptocurrency, especially those with younger employees.
Employees will only be able to integrate Bitcoin into their portfolio as opposed to other cryptocurrencies.
The Labor Department and other experts disagreed.
But for retirement, you need to have a dependable source of savings and income as opposed to what you might ‘play-invest’ in.
John also pointed out Fidelity’s decision to allow investors to hold up to 20% of their portfolios in Bitcoin is far higher than the cap for comparably volatile investments.