- The Department of Labor did not put bitcoin on a no-fly list, it does have severe concerns about the appropriateness of investing in digital assets. This means that if an employee’s 401(k) bitcoin assets go bankrupt, the company might be held accountable.
- Fidelity, one of the most well-known old-school banking behemoths to embrace digital currency trading, is pressing forward with the endeavor as Washington policymakers try to stay up with the $1.3 trillion crypto industry.
- With 23,000 companies utilizing Fidelity for employee retirement, AARP and consumer activists are warning that incorporating cryptocurrency into 401(k)s could leave employers and employees in the dark.
In an interview, Labor Department Acting Deputy Secretary Ali Khawar remarked, Our concerns are the attitude — the YOLO and FOMO of bitcoin. Right now, you have no idea whether you’re betting on the winner or not. It’s entirely hypothetical.
$1.3 Trillion Crypto Industry
Fidelity, one of the most well-known old-school banking behemoths to embrace digital currency trading, is pressing forward with the endeavor as Washington policymakers try to stay up with the $1.3 trillion crypto industry. The corporate decision demonstrates how Wall Street heavyweights are starting to lend their lobbying muscle to the crypto industry’s fight to alter the policies that are being created as virtual currency becomes mainstream.
With 23,000 companies utilizing Fidelity for employee retirement, AARP and consumer activists are warning that incorporating cryptocurrency into 401(k)s could leave employers and employees in the dark. The Department of Labor has warned that employers that include cryptocurrency in their pension plans risk being investigated for not acting in their employees’ best interests.
It’s really tough to separate the facts from the excitement — and there’s a lot of hype, said Micah Hauptman, the Consumer Federation of America’s director of investor protection. Providing these assets to plan sponsors for inclusion in their plans may increase their responsibility, which is bad for everyone. It’s bad for small firms, and it’s bad for their employees.
For nearly a decade, Fidelity has established itself as a crypto powerhouse, with a digital asset ecosystem that encompasses everything from Bitcoin mutual funds to institutional custody services. With financial startups turned powerhouses Block (formerly Square) and Coinbase, the business spearheaded a new advocacy and lobbying group called the Crypto Council for Innovation last year.
Fidelity announced their Bitcoin 401(k) in late April, more than a month after the Department of Labor cautioned against it. The Department of Labor warned in March that if pension plan administrators choose to invest their employees’ defined contribution plans in digital assets such as bitcoin, they risk being investigated.
The Appropriateness Of Investing In Digital Assets
When it comes to selecting investment options for their employees, plan trustees – usually employers – are held to extremely high standards of care. Certain investments are restricted, such as collectibles and certain precious metals. While the Department of Labor did not put bitcoin on a no-fly list, it does have severe concerns about the appropriateness of investing in digital assets. This means that if an employee’s 401(k) bitcoin assets go bankrupt, the company might be held accountable.
Notably, according to Fidelity spokesman Eric Sandwen, Bitcoin is not yet scheduled as an option in 401(k)s where Fidelity functions as trustee.
Dave Gray, head of products and platforms for Fidelity’s workplace, encouraged the Labor Department to revoke or alter its rules to declare it is not inappropriate to incorporate crypto in 401(k)s in an April 12 response letter. Individual employees who opt into the programme through their company make the decisions in Fidelity’s bitcoin 401(k) product, which it hopes to launch later this year.
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Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/05/14/the-price-of-bitcoin-is-plummeting-the-biden-administration-is-working-to-keep-him-out-of-your-401k-plan-k/