- US senators have written an open letter to the CEO of Fidelity regarding his Bitcoin 401(k) plan.
- The senators condemned the financial institution for offering bitcoin as an optional retirement investment strategy.
- The senators also recognize the struggles of Americans who try to save for retirement but fail to see that traditional finance is the problem.
A open letter of three U.S. senators was sent to the CEO of Fidelity Investments to condemn the company’s recent launch of a bitcoin 401(k) retirement plan.
Senators Elizabeth Warren, Richard Durbin and Tina Smith called Fidelity’s decision to offer bitcoin exposure through retirement accounts “very troubling.”
The senators argue that bitcoin is “a volatile, illiquid and speculative asset” unsuitable for US citizens’ retirement accounts. Lawmakers went on to explain some statistics by detailing the small amount of money that is, on average, held in these retirement accounts — $33,472.
Warren and his colleagues then paint a picture of Americans who need their retirement because they are living longer than ever and are likely to outlive their retirement savings.
“This begs the question: when saving for retirement is already a challenge for so many Americans, why would Fidelity allow those who can save to be exposed to an untested and highly volatile asset like Bitcoin? “, we read in the letter.
It seems that while senators are able to understand that there is a distinct lack of savings available to a generation of workers who will gradually reach a higher age than their predecessors, they do not have the ability to spot the real cause. As is often the case in politics, while it is easy to point out a problem, abandoning the root cause – of which traditional financial infrastructure is arguably a part – is often overlooked to maintain the status quo.
Fidelity offers its customers the opportunity to escape a doomed system. Additionally, as the senators pointed out in their letter, Fidelity also caps bitcoin retirement investment allocations. By doing so, Fidelity is effectively offering the bitcoin option while preventing investors from putting all of their funds into that basket.
Fidelity researched Bitcoin, understood its value and began offering a product with capped exposure to ensure that any volatility the market felt in the short term did not harm anyone’s livelihood. The investment manager has also clearly describes that bitcoin is not a short-term bet and investors need to develop long-term investment strategies.