US Senators Urge Fidelity to Stop Offering Bitcoin 401(k) Retirement Plans

The large 401(k) retirement plan company had previously announced cryptocurrency investments as an option.

Ian Sherr Contributor and Former Editor at Large / News

Ian Sherr (he/him/his) grew up in the San Francisco Bay Area, so he's always had a connection to the tech world. As an editor at large at CNET, he wrote about Apple, Microsoft, VR, video games and internet troubles. Aside from writing, he tinkers with tech at home, is a longtime fencer -- the kind with swords -- and began woodworking during the pandemic.

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Ian Sherr

Nov. 23, 2022 2:41 p.m. PT

2 min read

The cryptocurrency world has become volatile, and senators worry everyday people could lose their retirement savings.

Sarah Tew/CNET

Three Democratic senators have asked Fidelity Investments, one of the world's largest 401(k) providers, to stop allowing retirement plan sponsors to expose their participants and employees to bitcoin and other cryptocurrency investments.

In a letter Monday, Illinois Sen. Dick Durbin, Massachusetts Sen. Elizabeth Warren and Minnesota Sen. Tina Smith expressed concern about the crypto market's volatility, highlighted by the collapse and bankruptcy of FTX, the industry's second-largest exchange. The value of bitcoin, meanwhile, has fallen to a two-year low of $16,209.

"FTX's collapse, which has wreaked havoc across the digital asset market, cannot be ignored," the senators wrote. "By many measures, we are already in a retirement security crisis, and it should not be made worse by exposing retirement savings to unnecessary risk."

A Fidelity spokeswoman declined to answer the senators' specific concerns, but said that "recent events in the digital assets industry have further underscored the importance of standards and safeguards." It initially announced crypto investments in its 401(k) accounts earlier this year, citing "growing interest" from employers and their employees.

The letter marks another cloud over the crypto world, which was already struggling amid rapidly deflating market values over the past year.

While the letter from the three senators is notable, it's just the latest in a series of moves from Capitol Hill. The US House of Representatives Financial Services Committee is planning to hold a hearing about FTX in December.

"Unfortunately, this event is just one out of many examples of cryptocurrency platforms that have collapsed just this past year," Rep. Maxine Waters, a Democrat from California and chairwoman of the committee, said in a statement last week. She added that legislative action is needed to establish federal oversight of companies handling digital assets like bitcoin so that they "cannot operate in the shadows."