Fidelity Investments Introduces Bitcoin Investing Option in 401(k) Retirement Plans

In a first-of-its-kind move, financial services giant Fidelity Investments introduced Bitcoin investment option for 401(k) retirement plans on Tuesday, April 26. Thus, eligible investors will soon be able to put a portion of their 401(k) in Bitcoin.

Fidelity said that this facility shall be available to employers by the mid-year on 2022. Fidelity has been in the crypto space for a while now. Its crypto subsidiary - Fidelity digital Assets - provides crypto custodian and trading solutions to institutional investors.

Back in 2020, Fidelity digital asset management also launched a private Bitcoin fund currently available to accredited investors. Currently, more than 23,000 employers in America are using Fidelity services to administer their retirement plans.

Speaking of this development, Dave Gray, Fidelity’s head of workplace retirement offerings and platforms said: “There is growing interest from plan sponsors for vehicles that enable them to provide their employees access to digital assets in defined contribution plans, and in turn from individuals with an appetite to incorporate cryptocurrencies into their long-term investment strategies.”

“As a leader in digital assets, we are thrilled to be the first to offer employers exposure to bitcoin for the core lineup of 401(k)s,” he added. As per the press release, MicroStrategy plans to add 401(k) later this year working with Fidelity.

MicroStrategy’s Michael Taylor has been heavily adding Bitcoins to the company’s balance sheet over the last two years. Thus, it plans to be the first employer to offer Fidelity’s Digital Assets Account to their retirement plans.

MicroStrategy Chairman and CEO Michael Taylor said: “MicroStrategy looks forward to working with Fidelity to become the first public company to offer their employees the option to invest in bitcoin as part of our 401(k) program. Teaming with companies like Fidelity that are innovating in bitcoin for corporations is important to us, as is furthering the development of the bitcoin ecosystem for institutional investors.”

However, the decision to add Bitcoin exposure to retirement funds might not go well with regulators. Last month, the U.S. Labor department asked employers to maintain “extreme caution” while citing “significant risks” with crypto exposure.

In one of its official blog post, the U.S. DOL said: “At this early stage in the history of cryptocurrencies, however, the U.S. Department of Labor has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins, and crypto assets”.