Massachusetts Senator Elizabeth Warren and Minnesota Senator Tina Smith sent a letter to Abigail Johnson, CEO of Fidelity regarding Fidelity’s decision to offer Bitcoin investments for 401(k) plans. In the letter, the Senators asked the company to explain why they have failed to heed the Department of Labor’s (DOL) warning about 401(k) crypto investments.
They also raised concerns about potential conflicts of interest presented by Fidelity being both a Bitcoin miner and a purveyor of Bitcoin.
The lawmakers also wrote to inquire about the appropriateness of Fidelity’s decision to add Bitcoin to its 401(k) investment plan menu. The letter also questioned what actions the firm will take to address the significant risks of theft, fraud, and loss posed by the assets.
Last week, Fidelity announced its customers could put Bitcoin in their 401(k)s retirement accounts. With this new move, employers can place a limitation on the amount of savings marked for bitcoin with the maximum cap limit of 20%.
However, Fidelity’s move raised red flags with the U.S. Labor Department. Consequently, Labor Department officials pointed out that Fidelity investments’ plan to allow customers to store bitcoin in their 401(k) retirement savings accounts could jeopardize Americans’ financial security.
In this latest letter, the senators wrote, “Investing in cryptocurrencies is a risky and speculative gamble, which raises concern that Fidelity would take these risks with millions of Americans’ retirement savings. The company manages $2.7 trillion in assets for 20 million clients.
The letter further reads “Bitcoin, the cryptocurrency your company has deemed sound enough for your customers’ retirement savings accounts, has a particularly volatile history.”
The democrats gave Fidelity until May 18 to answer the questions about its approach towards Bitcoin investments. Fidelity has not yet responded to the specific issues raised but a spokesperson said that the company would respond directly to them.