Elizabeth Warren, Senator of Massachusetts, and her fellow Senator of Minnesota, Tina Smith, have expressed concerns about Fidelity’s latest Bitcoin-backed 401 (k) investment-a retirement plan-in a letter to the firm’s Chief Executive Officer, Abigail Johnson. In the letter, senators asked Abigail Johnson to explain the risks involved in Bitcoin-backed products before issuing the loan to American workers.
According to the Senator’s letter, Abigail has been asked to explain to American workers some of the inherent dangers connected with the introduction of the Bitcoin-backed loans. Senators urged Fidelity to disclose the risks associated with 401(k) investments and how it plans to manage them. Senators also wanted to hear how the company plans to deal with Bitcoin’s vulnerability to manipulation, as well as “the extra Bitcoin risks outlined by DOL, including the difficulties for plan members to make (an) educated investment.”
Despite the firm’s clarification that there would be no costs for the service, Senators asked to know if the intended consumers would be subject to any fees. Fidelity has previously stated that it would only allow roughly 20% of a client’s portfolio to be invested in digital currencies. Nevertheless, the senators have mostly questioned the notion of public demand. They wrote:
“Despite a lack of demand for this option—only 2% of employers expressed interest in adding cryptocurrency to their 401(k) menu—Fidelity has decided to move full speed ahead with supporting Bitcoin investments.”
Senator Elizabeth Warren frequently voiced her displeasure with anything related to Bitcoin, citing the fact that it is a Proof-of-Work (PoW) coin with a huge carbon footprint. With Fidelity’s investment offering now under scrutiny, only time will tell whether genuine organic demand drove the product’s introduction.
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