Lawmakers urge Fidelity to scrap Bitcoin retirement plan after FTX crash



US senators today sent another letter to investment giant Fidelity Investments, warning it against offering Bitcoin to its clients following the collapse of crypto exchange FTX.

Senators Elizabeth Warren of Massachusetts, Tina Smith of Minnesota and Richard Durbin of Illinois all signed the letter asking Fidelity to drop its 401(k) Bitcoin plan.

Boston-based Fidelity, one of the world’s largest asset managers, is the largest US provider of 401(k) savings accounts. In April, the company spear a new product offering companies and their participating employees access to Bitcoin.

But in May, Senators Warren and Smith sent a letter to Fidelity telling them it was a bad idea. This time, a new letter was sent, additionally signed by Senator Durbin.

“Once again, we strongly urge Fidelity Investments to reconsider its decision to allow sponsors of 401(k) plans to expose plan participants to bitcoin,” Monday’s letter said.

“The recent implosion of FTX, a cryptocurrency exchange, has made it clear that the digital asset industry is in serious trouble,” the senators added. “The industry is full of charismatic prodigies, opportunistic fraudsters and self-proclaimed investment advisers promoting financial products with little or no transparency.

FTX was once one of the biggest cryptocurrency exchanges, but went bankrupt this month after losing billions of dollars in investor liquidity. The exchange reportedly used customer money to make risky investment bets through its sister trading firm Alameda Research.

A document filed Saturday by FTX showed the exchange owed $3.1 billion to its top 50 creditors.

Notably, FTX is also one of the biggest contributors to political campaigns: former stock exchange CEO Sam Bankman-Fried was among the top 20 donors to Joe Biden’s 2020 U.S. presidential campaign, contribution of $5.2 million.

The crash rocked the crypto market and most digital assets plunged following the news.

Today’s letter added that the United States is “already in a retirement security crisis” that “should not be made worse by exposing retirement savings to unnecessary risk.”

Fidelity currently has over $9.9 trillion under its administration and has made major inroads into the world of digital assets.

Earlier this month he announcement an early access waiting list for its latest crypto product: an app allowing retail investors to trade Bitcoin and Ethereum from their phones without paying commission.

Stay up to date with crypto news, get daily updates in your inbox.

Source link


Comments are closed.