According to a report confirmed by the Wall Street Journal, Fidelity has stated that it is planning for employees to invest in Bitcoin through assets belonging to their retirement funds, also known as 401(k). This is approved as long as the owner agrees to the terms of the organization. Under the original plan, the company allowed owners to deposit up to 20% of their 401(k) balances into investment accounts for Bitcoin, however this limit could be reduced by sponsors.When the bitcoin holding balance exceeds 20% of the value of the portfolio, the employee will not be able to transfer the additional amount to the account from other investments in the 401 (k) package; Employees can continue to contribute to the payroll. About 5% or less of a bitcoin account will be held in a short-term money market fund to provide liquidity to facilitate daily transactions. The fee on the account will be from 0.75% to 0.9%, depending on the client, excluding transaction costs.
Fidelity's decision comes a month after the Labor Department expressed concerns about the inclusion of cryptocurrencies in retirement plans.
Basically, 401(k) was born in developed countries (USA, Japan). This is the name of the personal pension fund, which is designed in case the government cannot afford to pay pensions for workers of working age, especially in the context of the amount of cash circulating in the market in these countries is increasingly depleted.
Fidelity Investment is currently the largest 401(k) package provider in the United States. Once this decision is issued, company employees can add Bitcoin to their retirement assets.
Dave Grey, Head of Fidelity's Workplace Retirement Services division, said: "We're starting to see growing interest from planning sponsors, about how Bitcoin or digital assets can be offered in retirement plans. We fully expect cryptocurrencies to shape the minds of future generations about investing in the near and long term,"
he revealed that MicroStrategy will be their first customer to sign up for Fidelity's Bitcoin 401(k) offering. The software company currently holds 129,218 Bitcoins on its balance sheet.
Dave Grey also stated that, depending on the client's demand for crypto assets, the company will allow them to add other electromagnetic money assets to its investment options. With this decision, Fidelity became one of the first financial institutions in the world to address the aforementioned retirement issue in cryptocurrencies with the launch of its digital assets division in 2018. Since then, the investment firm has become one of Bitcoin's biggest backers.
CEO Jeff Schulte said the company has been arguing with the U.S. Department of Labor throughout 2021 about linking a cryptocurrency account to a 401(k) account. Even after Labor's stern warning on March 1-0, which warned "be extremely careful when considering adding the cryptocurrency option to the 401(k)'s investment plan," Schulte said, adding that he still expects the decision to be enforced this quarter. And to improve the understanding of prospective investors, Fidelity requires them to take a test of the risks of cryptocurrencies before entering the market.
Fidelity's latest move comes at a time when concerns about cryptocurrencies are growing. Based on statistics in early April of this year, the number of Americans starting to use and believe in the future of cryptocurrencies unexpectedly skyrocketed. They estimate that there are already about 80 million individual investors here who own cryptocurrencies.
