Last week, U.S. Treasury Secretary Yellen spoke out against the dangers of cryptocurrencies as a retirement savings vehicle, calling it a “very risky move.”
Yellen isn’t alone in her criticism; several analysts and professionals have also publically blasted the idea. For example, Forbes contributor and partner at law firm Adkisson Pitet, Jay Adkisson, likened it to playing roulette. He said the inherently speculative nature of cryptocurrencies isn’t something to mingle with retirement planning.
“It is suggested, however, that perhaps the better bet is to simply take the amount one is willing to wager, take that to a casino, and let it ride on either red or black on the roulette table.”
Similarly, the Department of Labor recently asked fiduciaries to “exercise extreme care” before enabling savers to add cryptocurrencies to their 401(k)s. Chief among their concerns were volatility and overvaluation.
As a response, Yellen said it would be appropriate for lawmakers to “address the danger” by changing the types of allowable 401(k) investments.
But considering Bitcoin’s (BTC) stellar performance over the long term, would a ban on crypto 401(k)s be a step too far?
Fidelity Investments becomes the first major provider to offer cryptocurrencies for 401(k)s
In April, Fidelity Investments announced the option for U.S. citizens to add Bitcoin to their 401(k) company-sponsored retirement plans. Under the proposals, investors can allocate up to 20% of their account balance to Bitcoin. However, individual fiduciaries can lower that cap if they choose to.
Given that Fidelity is America’s biggest retirement plan provider, the crypto industry essentially saw this as a nod to the growing legitimacy of Bitcoin. However, more conservative investors slammed the move, citing concerns about volatility and a lack of fundamentals backing digital assets.
Year-to-date, Bitcoin is down 40%, but that hasn’t stopped Fidelity from pressing ahead with a Bitcoin 401(k) product. Dave Gray, Head of Workplace Retirement Offerings and Platforms at Fidelity Investments, said the move was primarily prompted by “plan sponsors” (or employers), who voiced interest in such an offering.
“We started to hear a growing interest from plan sponsors, organically, as to how could Bitcoin or how could digital assets be offered in a retirement plan.”
As mentioned, the Labor Department reacted by reminding…
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