In March 2022, the US Labor Department expressed serious concerns about the involvement of cryptos in retirement plans.
Fidelity Investments, a US-based financial service firm, has in its latest report disclosed its plans to allow investors to get closer to direct investment in Bitcoin without creating a new crypto account on any exchange. The plan expected to roll out later this year will give investors the liberty to put Bitcoin in their 401(k) retirement savings account.
Fidelity is the largest provider of 401(k) plans in the US with $2.4 trillion in assets in 2020 or more than a third of the market. According to the report, the involvement of participants will depend on the approval of their employers. The fees on the Bitcoin investment in the (401k) accounts will be between 0.75% and 0.90% in addition to an undisclosed amount of trading fee. Fidelity has also disclosed its plans to come out with educational resources to assist investors.
In March 2022, the US Labor Department expressed serious concerns about the involvement of cryptos in retirement plans. According to the department, cryptos are highly speculative and volatile trading investments with inflated values. However, the department did not discourage the move but urged providers to go the extra mile to provide adequate education to potential investors on the risk involved. They further advised that the education should also focus on the ever-changing regulatory environment and volatile crypto prices.
MicroStrategy Inc (NASDAQ: MSTR), a business analytics firm whose founder is a strong believer in Bitcoin, has signed on to the plan according to reports. Fidelity has in the past come out with other products that focus on cryptos in their efforts to accelerate the crypto adoption rate. It launched the first regulated offering that provided Bitcoin custody and trading services for institutional investors in Canada in November last year. Scott Mackenzie, FCC’s president In a statement hinted that their moves are motivated by the rising demand for digital assets.
“The demand for investing in digital assets is growing considerably and institutional investors have been looking for a regulated dealer platform to access this asset class,” he said.
Fidelity also launched two publicly traded Bitcoin funds on the Toronto Stock Exchange in December. This was also launched in Germany and Switzerland. Early this year, Fidelity announced its plan to add Bitcoin exposure to its All-in-One Growth and All-in-One Balanced funds.
Chris Pepper, vice-president of corporate affairs at Fidelity highlighted the diversification benefits of Bitcoin.
“It is important to consider that there are investment characteristics of Bitcoin, such as relative low correlation to equities and fixed income, that have the potential to enhance diversification and dampen overall portfolio volatility,” he added.
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