Senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota wrote an open letter to Fidelity Wednesday questioning why the firm was permitting customers to put bitcoin in their 401(k)s. Fidelity announced last week that it would allow people to devote as much as 20% of their retirement plan to bitcoin towards the end of the year.
“Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans’ retirement savings,” the letter reads. “Bitcoin, the cryptocurrency your company has deemed sound enough for your customers’ retirement savings accounts, has a particularly volatile history.”
The world’s most popular cryptocurrency dropped 8% just on Thursday alone and some experts believe that the industry has entered a “crypto winter,” with bitcoin facing a prolonged downturn after an all-time high in November last year.
Elizabeth Warren and Tina Smith are concerned that Fidelity is using naive investors to juice the price of bitcoin, saying that they fear Fidelity is acting on a conflict of interest after admitting that they were mining crypto in 2017. In the past five years, Fidelity has made several moves to support the crypto market, adding Coinbase links to retail customer accounts and opening a crypto and digital payments ETF. The Senators think that by allowing investors to choose bitcoin for their retirement portfolios, the firm is only acting more suspicious — especially after finding that just 2% of employers using Fidelity are interested in adding the bitcoin option.
The Massachusetts Senator has been outspoken against crypto, arguing that price fluctuations make bitcoin dangerous for consumers, high energy usage makes bitcoin bad for the environment and decentralization makes the market ripe for fraud. In March Warren introduced a bill to punish crypto exchanges that perform transactions for peoples and businesses on the US sanctions list, arguing that crypto was being used by Russian oligarchs to evade punishment as a result of the war in Ukraine. She’s developed a reputation for strongly-worded and well-sourced letters laying out her complaints about crypto, some of which have been sent to SEC chair Gary Gensler.
Senator Tina Smith has made fewer waves, though she has also been a consistent critic. Last summer she said most of DeFi violates US commodities law, and she voiced her opposition to Facebook managing its own cryptocurrency in October. Both Tina Smith and Elizabeth Warren sit on the Senate Banking Committee.“We look forward to continuing our respectful dialogue with policy makers to responsibly provide access with all appropriate consumer protections and educational guidance for plan sponsors as they consider offering this innovative product,” Fidelity told the Wall Street Journal in an emailed statement.