Three Democratic senators urged Fidelity Investments to reconsider its retirement product that allows investors to put bitcoin in their 401(k)s, citing the rapid downfall of Sam Bankman-Fried’s crypto empire.
United States senators Elizabeth Warren, Tina Smith and Richard Durbin said in a letter addressed to Fidelity CEO Abigail Johnson that while the full extent of the damage caused by FTX’s collapse continues to unfold, the contagion is being felt across the broader digital asset market. Bitcoin is no exception, they warned.
“The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear the digital asset industry has serious problems. Since July, when we last raised concerns with you about the deeply concerning prospect of exposing workplace retirement plans to Bitcoin, its value has plummeted,” the senators wrote.
FTX aside, the lawmakers said that cryptocurrency investments have only grown as a risky and speculative gamble, and they are concerned that Fidelity would take these risks with millions of Americans’ retirement savings. The trio proceeded to highlight the volatility of bitcoin and other cryptocurrencies compared to stocks in the S&P 500.
“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 added.
With more than $10 trillion in assets under administration, Fidelity is the US largest retirement plans provider, and its decision was seen as a major catalyst to make crypto even more mainstream. The crypto offering is available for 23,000 employers that use Fidelity to administer their 401(k) retirement accounts.
Fidelity Digital Assets, the digital arm of Fidelity Investments, announced plans last month to increase its headcount by 25 percent to meet what it described as the mounting demand of clients who continuously invest and trade in crypto assets 24/7.
Currently having nearly 410 employees, the company was looking to hire people for the 100 new positions in the technology, operations, and client services departments geared towards other investments apart from Bitcoin.
Fidelity Digital Assets, immersed in crypto since 2018, has doubled its staff in locations such as Dublin, Boston, and Salt Lake City. The move came as the firm was rumored to be considering offering crypto trading to its more than 34 million retail customers.
Fidelity has also been busy working on a crypto exchange, in partnership with Charles Schwab, Ken Griffin’s Citadel Securities and US electronic market maker Virtu Financial.