Dive Brief:
- Fidelity Investments will offer employer clients a bitcoin option for 401(k)s. The company announced the news April 26, just weeks after the federal government cautioned employers about such benefits.
- The change will enable individuals to have a portion of their retirement savings allocated to bitcoin, the company said in the press release.
- The offering will be widely available to employers mid-year, according to Fidelity.
Dive Insight:
Fidelity’s announcement comes shortly after the U.S. Department of Labor urged 401(k) plan fiduciaries to “exercise extreme care” before adding cryptocurrency to employee investment options.
Fidelity pointed to “growing interest from plan sponsors” in digital assets within defined contribution plans, just as DOL reminded those with fiduciary responsibilities that the Employee Retirement Income Security Act requires they “act solely in the financial interests of plan participants and adhere to an exacting standard of professional care.”
Among other authorities, DOL pointed to a January U.S. Supreme Court decision that held “[e]ven in a defined-contribution plan where participants choose their investments, … plan fiduciaries must conduct their own independent evaluation to determine which investments may be prudently included in the plan’s menu of options.”
The enforcement agency also warned employers that it intends to investigate such cryptocurrency offerings “and to take appropriate action to protect the interests of plan participants and beneficiaries.” DOL continued: “The plan fiduciaries responsible for overseeing such investment options or allowing such investments through brokerage windows should expect to be questioned about how they can square their actions with their duties of prudence and loyalty[.]"
