Tag: Fidelity

The financial service provider Fidelity Investments wants to give pension savers the opportunity to deposit up to 20 percent of their contributions in Bitcoin. In the future, other digital assets will be available to choose from. American financial services provider Fidelity Investments will include Bitcoin in its section 401(k) retirement savings investment opportunities. The Wall Street Journal reported on April 26. 401(k) retirement expenses are deducted from taxable income. This is a significant development because nearly 23,000 US companies are hiring Fidelity Investments to manage the building of retirement plans for their employees. If you want to use the service, the Boston-based financial services provider will set up a Bitcoin account within the 401(k) pension plan. Under this plan, Fidelity will allow investors to invest nearly 20 percent of their contributions in bitcoin. However, the proposed sponsors may lower this threshold at their own discretion. Dave Gray, head of corporate pensions at Fidelity Investments, said the decision was made in light of growing client demand: "We heard a growing interest from plan sponsors about how Bitcoin or digital assets could be offered in a retirement plan." Gray also stated that it will initially be limited to Bitcoin, but is open to offering other cryptocurrencies in the future. For the Bitcoin account, Fidelity will charge an account fee of 0.75-0.9 percent. It varies depending on the employer and the amount invested. Ministry of Labor watches with eagle eyes Last month, the U.S. Department of Labor released a compliance document stating it will closely monitor 401(k) crypto investments. Depositing workers are urged to exercise “extreme caution” as theft, fraud and financial loss could result. The ministry has also warned that any larger crypto investment in pension funds than the 20 percent maximum allowed could result in severe legal action. The department argues that 401(k) investing is Americans' retirement plan and exposure to a volatile asset class like cryptocurrencies is undesirable: “However, at this early stage in cryptocurrency history, the U.S. Department of Labor has serious concerns about allowing investors to invest directly in cryptocurrencies or related products such as NFTs, coins, and cryptoassets. Aside from the fact that cryptocurrencies are speculative and volatile, there are other concerns as well. One of the biggest concerns for the ministry is custody services for digital assets. Managing “cold wallets” is not easy for retail investors, and the “hot wallets” offered by crypto exchanges can be hacked. On top of that, many analysts have also raised major concerns about the realism of crypto valuations. However, some companies, such as MicroStrategy, have already launched Bitcoin-based 401(k) pension plans.

Tag: Fidelity

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