Fidelity will soon begin allowing eligible individuals to save a portion of their 401(k) in Bitcoin, the company announced on Tuesday. Employees will only gain access to the option if their employer approves the option, which Fidelity says will begin rolling out in mid-2022.
While Fidelity does not specify how much employees can spend on crypto at its launch, the Wall Street Journal reports that employees can choose to save up to 20 percent of their retirement fund in Bitcoin. Dave Gray, Fidelity’s head of workplace retirement offerings and platforms, also told the WSJ that Fidelity plans to add support for other cryptocurrencies at some point in the future.
“As a leader in digital assets, we are thrilled to be the first to offer employers exposure to bitcoin for the mainline 401(k) that reflects our commitment to meeting their evolving needs and our belief in the promise of blockchain technology to the future of the financial industry,” Gray said.
As noted by Fidelity, business intelligence firm MicroStrategy is the first to announce that it has adopted Bitcoin’s retirement fund option. The company, led by Bitcoin advocate Michael Saylor, acquired $250 million in Bitcoin in 2020 and continued to buy cryptocurrencies as part of its financial strategy. However, the Securities and Exchange Commission (SEC) took issue with the way MicroStrategy accounted for its Bitcoin assets in one of its SEC filings last year. According BloombergMicroStrategy used non-GAAP measuresor earnings reporting methods that are not based on Generally Accepted Accounting Principles (GAAP), to account for your digital assets.
This was not MicroStrategy’s first run-in with the SEC: in 2000, the SEC settled with Saylor and other executives for $11 million finished civil accounting fraud chargesand claimed that the company “significantly overstated its revenues and earnings” after MicroStrategy went public in June 1998 through March 2000. The executives each paid $10 million in restitution and a $350,000 civil penalty, without “admit or deny the allegations of the Commission”. .”
Fidelity may face some pushback on its new offering. Last month, the US Department of Labor warned fiats against offering a cryptocurrency retirement savings option “in an effort to protect the retirement savings of working Americans,” citing that this type of investment presents “significant risks and challenges to the retirement accounts of participants, including significant risks of fraud, theft, and loss.” President Joe Biden also signed an executive order designed to push for further regulation of cryptocurrencies in the US.