The largest retirement plan provider could make cryptocurrency even more mainstream
Fidelity Investments plans to allow the retirement savers to put money into 401(k) accounts if employers give their consent. Later this year the option will become available to 23,000 companies who use Fidelity to administer their employees retirement accounts with $2.7 trillion in assets under management.
The balance in bitcoin holdings will be capped at 20% of portfolio’s value, so employees wouldn’t be able to transfer additional crypto sums in excess of this amount. The management fees will be between 0.75% and 0.9% depending on the client and investment.
The decision has been taken despite the Labor Department’s caution just a month ago against involving cryptocurrencies in 401(k)s, referring to speculation, volatility and high valuations. But according to Dave Gray, head of workplace retirement offerings and platforms at the Boston-based company, there’s been a “growing and organic interest” from the fund’s customers to diversify their portfolio holdings.
“There is a need for a diverse set of products and investment solutions for our investors,” said Gray. “We fully expect that cryptocurrency is going to shape the way future generations think about investing for the near term and long term.”
Yet there could be significant legal obstacles to bitcoin’s mass adoption in 401(k) offerings. The Labor Department regulates company-sponsored retirement plans and published guidance on March 10 urging employers to “exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu.” Fidelity, along with other financial-services industry participants, wrote letters calling on the Labor Department to withdraw the guidance, according to Mr. Gray and industry lawyers.