Fidelity Investments customers with awill be able to invest a portion of their account funds in bitcoin starting later this year, the first time a major retirement plan provider is adding cryptocurrency to their menu.
Dave Gray, head of workplace retirement offerings at Fidelity, said Tuesday that the company expects blockchain technology — the foundation for cryptocurrency — to play an important role in financial services. Fidelity is the nation's largest retirement services provider, managing plans for 23,000 employers.
Although it's considered highly unstable by most financial experts, bitcoinin part because more companies began accepting it as a form of payment. In another sign that cryptocurrency is gradually becoming a mainstream investment, Wall Street firms have created exchange-traded funds around crypto futures.
Despite the risks of wild price swings, roughly 40 million Americans have invested in cryptocurrencies, including about 43% of men ages 18 to 29. according to the Pew Research Center. Fidelity said it estimates that roughly 80 million individual investors in the U.S. own or have previously invested in a digital currency.
Employees who choose Fidelity's new option will have their bitcoin held and managed in a so-called digital asset account, which is separate from the main 401(k) bucket. Fidelity plans to cap how many times an account holder can buy and sell bitcoin.
Fidelity is offering bitcoin despite the U.S. Department of Labor last month expressing "serious concerns" about employees adding cryptocurrencies to their retirement accounts. In a March 10 blog post, Assistant Secretary Ali Khawar said department officials were worried about the risk crypto poses to investors.
"Cryptocurrencies' prices have been extremely volatile," Khawar wrote. "For example, in just one day last December, the price of bitcoin dropped by more than 17%. These large swings can leave participants vulnerable to significant losses."
Khawar said companies should "exercise extreme care before they consider adding a cryptocurrency option" for employees.
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