Fidelity Launches Bitcoin Offering for 401(k) Plans

Mandatory Credit: Photo by Rafael Henrique/SOPA Images/Shutterstock (12603831l)In this photo illustration the Fidelity Investments logo displayed on a smartphone screen and a stock market graph in the background.
Rafael Henrique/SOPA Images/Shutterstock / Rafael Henrique/SOPA Images/Shutterstock

Fidelity Investments launched what it deems the industry’s first offering that will enable investors to have a portion of their retirement savings allocated to bitcoin through the core 401(k) plan investment lineup.

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The move was prompted by the growing interest in digital assets, and the fact that 401(k) plan sponsors and participants are looking for ways to gain digital assets exposure in retirement portfolios, according to a Fidelity press release.

The new offering, which bitcoin-bull firm MicroStrategy plans to add to its 401(k) plan later this year, will be available broadly to employers mid-year.

Dave Gray, head of workplace retirement offerings and platforms at Fidelity Investments, told GOBankingRates:

“Fidelity is thrilled to launch a first-of-its-kind workplace digital assets account that will enable individuals to have a portion of their retirement savings allocated to bitcoin through the core 401(k) plan lineup. This new offering represents the firm’s continued commitment to evolving and broadening its digital assets offerings amidst steadily growing demand for digital assets across investor segments.”

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Fidelity will allow clients to allocate as much as 20% to bitcoin, with the addition of other digital assets in the future, according to a spokesperson.  

The move is being lauded by industry experts, including Brock Pierce, Bitcoin Foundation chairman, who told GOBankingRates that Fidelity has been one of the most forward-thinking financial institutions in the space and has been investing in many different crypto companies across the ecosystem as well as exploring mining internally.

“It is no surprise that they are rolling this out, as it is no secret that they have been working on this behind the scenes for a number of years. It will be yet another way for users to get comfortable adopting bitcoin,” Pierce added. 

Sylvia Jablonski Kampaktsis, CEO, CIO, and co-founder at Defiance ETFs, told GOBankingRates that Fidelity’s move is, “an enormous opportunity for plan participants, and is long overdue.”

“The move by Fidelity, also enforces the idea that digital assets are highly sought out investments which are here to stay. We now have countries, pensions, family offices and now a massive institutional player in the retirement space allowing access. It speaks to the growth prospects of this asset class,” she added.

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According to the Fidelity Digital Assets 2021 Institutional Investor Digital Assets Study, 30% of U.S. institutional investors surveyed would prefer to buy an investment product containing digital assets. 

Meanwhile, Fidelity estimates that roughly 80 million U.S. individual investors currently own or have invested in digital currencies.

Michael Saylor, chairman and CEO of MicroStrategy, wrote in the release, “MicroStrategy looks forward to working with Fidelity to become the first public company to offer their employees the option to invest in bitcoin as part of our 401(k) program.”

“Teaming with companies like Fidelity that are innovating in bitcoin for corporations is important to us, as is furthering the development of the bitcoin ecosystem for institutional investors,” he added.

Not everyone is on board with adding cryptos to retirement plans. Indeed, in March, the Labor Department said it was cautioning plan fiduciaries, “to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants,” as it has “serious concerns” about investments in cryptos and NFTs, as GOBankingRates previously reported.

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“In recent months, some financial services firms have begun marketing investments in cryptocurrencies as potential investment options for participants in 401(k)s. At this early stage in the history of cryptocurrencies, however, the U.S. Department of Labor has serious concerns about plans’ decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins, and crypto assets,” the Department said in a blog post on its website in March. 

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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