Democratic Sens. Dick Durbin, Elizabeth Warren and Tina Smith on Monday intensified the pressure on Fidelity Investments to reconsider its decision to allow employers to offer bitcoin exposure to 401(k) plan participants in the wake of crypto exchange FTX filing for bankruptcy earlier this month.
The senators first wrote a letter to Fidelity in July.
“Since our previous letter, the digital asset industry has only grown more volatile, tumultuous, and chaotic-all features of an asset class no plan sponsor or person saving for retirement should want to go anywhere near,” the senators wrote in the letter, released Monday.
Fidelity didn’t immediately provide comment on the senators’ letter.
Bitcoin is trading at as low as $15,591 on Monday, the lowest level since November 2020, according to CoinDesk data.
In April, the Boston-based investment firm said it was offering a bitcoin option for the 401(k) plans it administers, though employers will get the final say on whether or not they roll that feature out to their plan participants. The product will be available to employers in Fidelity’s 401(k) lineup by midyear, the company said at the time.
Fidelity had said it would establish a limit on how much of a 401(k) plan can be invested in bitcoin – no more than 20%. Fidelity would give the 23,000 companies that use its platform to administer their retirement plans the ability to adjust that limit, perhaps choosing 5% or 10%, but no more than 20%.
The move came after the number of investors dabbling in cryptocurrencies had grown substantially, with 22% of households using crypto in 2021, up from 8% in 2020, according to research firm Hearts & Wallets.
However, crypto’s credibility and value has been knocked in recent weeks amid the bankruptcy filing of FTX after pausing customer withdrawals.
In March, the Department of Labor, which regulates company-sponsored retirement plans, told 401(k) plan sponsors to exercise caution when including cryptocurrencies in their 401(k) plans.
Ali Khawar, acting assistant secretary of the Labor Department’s Employee Benefits Security Administration, had said that “at this early stage in the history of cryptocurrencies,” the department “has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins, and crypto assets.”