Three U.S. senators wrote an open letter to the CEO of Fidelity Investments to express their disapproval of the firm's recent introduction of a Bitcoin 401(k) retirement plan. Senators Elizabeth Warren, Tina Smith, and Richard Durbin said it was “immensely troubling” that Fidelity offered exposure to Bitcoin through retirement funds.

The senators claim that Bitcoin is “a volatile, illiquid, and speculative asset” that should not be included in American citizens' retirement accounts. The politicians went on to present some statistics and the “small” median balance of $33,472 that is held in these types of accounts.

Warren and her colleagues described in the letter that Americans are in need of their retirement since they are living longer than ever before and are most likely going to outlive their retirement savings.

The letter states:

This begs the question: when saving for retirement is already a challenge for so many Americans, why would Fidelity allow those who can save to be exposed to an untested, highly volatile asset like Bitcoin?

The senators admit that multiple generations of workers will gradually live longer than their predecessors, however the root of the retirement problem is not stated in their letter. With rising inflation occurring in every country around the world, the senators seek to deny Americans the ability to have the option to invest in something like Bitcoin where the monetary rules and protocols cannot be easily changed without consensus.

The senators also recognize all of the other available options for individuals to participate in the “Bitcoin and the cryptocurrency casino,” but go on to state that offering Bitcoin purchases through retirement accounts is “a bridge too far.”

Fidelity customers have the opportunity to gain exposure to a separate system that is outside of the U.S. government’s direct influence with the company’s Bitcoin 401(k) retirement option. Additionally, the senators point out that Fidelity limits the dollar amount that customers are able to allocate into their Bitcoin holdings. By doing this, Fidelity effectively gives investors access to Bitcoin's price appreciation while prohibiting them from putting all of their money in one asset.

Fidelity fund managers released a report in January of 2022 where they investigated Bitcoin, state its use cases, and started providing a product with capped exposure to ensure that any short-term market volatility had no long-term negative effects on any customers’ holdings. The Fidelity report also makes it clear that clients should have a long-term investment outlook for Bitcoin and avoid short-term speculation.

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