Fidelity Investments to allow clients to hold bitcoin in 401(k) retirement accounts

Fidelity Investments plans to provide clients with the ability to accumulate bitcoins in 401(k) retirement accounts with the consent of their employers. The Wall Street Journal reports.

This summer, such an option will be available to employees at 23,000 companies using Fidelity to manage their retirement plans, representing $2.7 trillion in assets.

Management fees will amount to 0.75%–0.9% of AUM depending on the amount invested and client type. Trading commissions are also expected to be charged.

The share of digital assets in the portfolio will be capped at 20%. In the future, the addition of other cryptocurrencies is not ruled out.

“There is a need for diversification […] Cryptocurrencies will shape the investment mindset of future generations. We are witnessing growing and organic interest from clients across a wide range of industries,” said Dave Gray, head of Fidelity’s retirement products.

The decision comes a month after the Department of Labor raised concerns about adding digital assets to 401(k) accounts.

The department could request employers to confirm that such plans meet the criteria of prudence and loyalty. Industry participants, including Fidelity, have urged the withdrawal of such guidance.

In November 2019, Fidelity Investments launched an institutional-grade crypto custody service.

In 2020, US pension plans offering investments in the first cryptocurrency included DAiM, as well as Bitwage with Gemini.

Earlier, one of New Zealand’s NZ Funds Management pension funds invested 5% of assets in bitcoin.

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