A few months after Fidelity Investments integrated digital asset accounts (DAA) to its 401(K) retirement savings accounts, enabling employees to add bitcoin (BTC) to their accounts, the leading financial services company has revealed that more employers are demanding the Bitcoin 401K accounts for their employees.
Increased Customer Demand
Speaking to investing publication Barron’s, Fidelity noted that the growing demand for its 401(k) digital asset accounts comes from clients across different sectors.
“In fact, client interest has not only been strong but also spans across a wide range of industries and company sizes,” the asset management firm said.
Following Fidelity’s disclosure in April, leading business intelligence company MicroStrategy was the first to sign up for the DAA feature.
Financial entities planning to adopt bitcoin in their 401 retirement accounts must obtain approval from the necessary authorities before offering the services to their employees, people familiar with the matter said. While the authorization process can take a few months to complete, Fidelity only takes 90 days to implement the offer.
The financial services company said all of its clients would have the option to include BTC in their menu, adding that employees can save up to 20% of their funds in bitcoin with their employer’s permission.
Fidelity’s Inclusion of Bitcoin to 401(K) Attracts Critics
Since Fidelity decided to allow customers to allocate a portion of their funds in bitcoin to their savings account, the firm has received backlash from government authorities condemning their plan.
In June, Coinfomania reported that Janet Yellen, the U.S. Secretary of Treasury, noted that digital assets are “very risky” to be included in retirement plans.
To further express her displeasure, she called on Congress to ascertain which assets could be exempt from taxation, as they do in 401(K) savings.
On a separate note, Yellen and the Democrat Senator, Tina Smith of Minnesota, addressed a letter to Fidelity’s chief executive officer, Abigail Johnson, outlining crypto volatility and enquiring how the firm plans to deal with “significant risks such as fraud, theft, and loss.”
Aside from that, the Department of Labor (DOL) warned fiduciaries planning to follow in Fidelity’s footsteps to be extremely careful before adding crypto options to their retirement menu due to the high risks involved in digital assets.
According to the report, DOL addressed the firms’ responsibilities under the Employment Retirement Income Security Act (ERISA) while noting that cryptocurrencies are inherently volatile and should not have a place in 401(K) accounts.
