The U.S. Department of Labor (DOL) is reportedly having “grave concerns” about Fidelity Investments’ recent decision to launch Bitcoin (BTC) 401(k) plans.
In a new Wall Street Journal (WSJ) interview, Acting Assistant Secretary of the DOL’s Employee Benefits Security Administration (EBSA) Ali Khawar acknowledges crypto has intriguing use cases but says it needs “maturing” before people devote their retirement accounts to the sector.
The EBSA is the agency responsible for overseeing workplace retirement plans.
Asset managing giant Fidelity announced plans this week to launch digital asset accounts, enabling holders of 401(k) plans to invest in BTC if their employers let them.
Fidelity will reportedly allow a maximum BTC allocation of 20%. The Labor Department is specifically concerned with that percentage, according to a senior DOL official who spoke to the WSJ. Khawar says the department has scheduled a conversation with Fidelity to outline their concerns.
The asset manager tells the WSJ its new Bitcoin 401(k) plans represent “the firm’s continued commitment to evolving and broadening its digital assets offerings amidst steadily growing demand for digital assets across investor segments, and we believe that this technology and digital assets will represent a large part of the financial industry’s future.”
Fidelity’s move to allow employees to allocate Bitcoin to their retirement savings plans comes a little over a month since the EBSA urged providers of 401(k) plans to “exercise extreme care before including direct investment options in cryptocurrency.”
The EBSA cites crypto’s volatility, uncertain valuations and evolving regulatory environment as reasons for concern.
The agency also argues it is difficult for 401(k) plan participants to make informed decisions about the digital asset sector.
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