America’s Labor department has stated that it is hugely worried that Fidelity Investments is offering a retirement portfolio that includes crypto, especially BTC. A few days ago, Fidelity announced that its customers could have BTC in their retirement portfolio.
The Concerns Of The Labor Department
A top-level executive of the employee benefits security administration (EBSA) revealed to the Wall Street Journal (WSJ) that the agency is ‘gravely concerned’ about Fidelity’s new offering. The EBSA is one of the subsidiaries of the labor department and supervises employer-sponsored retirement plans for Americans.
On April 26, Fidelity issued a press release explaining that its customers’ retirement portfolio could contain up to 20% BTC. Even though this retirement plan will be available to the public this summer, crypto asset management firm, Microstrategy, has confirmed its intention to invest in the plan through its CEO (Michael Saylor).
While speaking with the New York Times on why Fidelity decided to launch this new retirement plan, the company’s head of workplace retirement offerings and platforms, Dave Gray, said, “our plan sponsors continually inform us of the increasing request for when we would start offering a retirement plan for BTC or other cryptocurrencies. That made it compulsory to develop and launch this plan.”
It is the second time the labor department has expressed worries over the inclusion of cryptos in the retirement plan for Americans. Last month, the labor department warned employees to be wary of including cryptos in their retirement or investment portfolio.
Two critical reasons it cited for issuing the warning were the lack of regulation of the crypto space and the enormous volatility of cryptos, which can force anyone to make unintelligent investment decisions when trading the crypto market. Part of the warning reads, “the department warns plan fiduciaries to be very careful before including digital assets as one of the retirement plan options for their customers.”
Fidelity Isn’t The First Firm To Offer A Crypto-Inclusive Retirement Plan
It is not the first time a company will offer a crypto-inclusive retirement plan. Last year, retirement plan provider (ForUsAll) and leading crypto exchange (Coinbase) launched their respective crypto-inclusive retirement plans. What’s similar between their plans and Fidelity’s plan is that BTC was included. However, there are two notable differences between them. Fidelity’s plan doesn’t include other cryptos yet. The ones by Coinbase and ForUsAll consist of other cryptos.
Also, Fidelity allows its customers to have up to 20% of their retirement portfolio in BTC. The other ones only allow their customers to have 5% of the crypto portfolio in crypto. Three months ago, iTrustcapital generated $126M in its latest series’ funding to launch a crypto-based IRA offering.
iTrustcapital claims that investors in this offering will enjoy some tax advantages. However, the amount they can invest is limited. With this Fidelity crypto retirement offering, the Labor Department can’t do anything again to prevent employees from including cryptos as part of their retirement portfolio.