When Fidelity first announced the upcoming launch of its Digital Assets Account that would enable companies to opt into adding Bitcoin to their customers' retirement savings accounts the reaction as expected was swift and heavily divided. Many in the crypto space and people I know personally who identify as Libertarian championed the move as it gave the PEOPLE the ability to choose what they wanted to do with their money. Others though came out guns blazing against them due to the lack of regulations, recent crypto hacks, and the volatile nature of the currency.
Another point that skeptics harped on was how in March just a month prior the Department of Labor came out against adding cryptocurrencies as an investment option to a 401(k) plan. It was on this point that Senator Elizabeth Warren jumped at along with fellow Democrat Senator Tina Smith in a letter sent Wednesday to Fidelity. In their letter, they ask several questions about the upcoming product launch including things like conflict of interest since Fidelity is a Bitcoin miner, something I did not previously know, and a purveyor of it.
While I could go on and on about the questions, which have since been made public, and point out obvious answers and plain old missing logic I will not do that. Rather I want to look at this product (Bitcoin) and compare it to things that are already acceptable things to invest in the 401(k). To do that I want to make it clear what a 401(k) is in case you do not live in the US or do not use one. At its core, it is a retirement account that is sponsored by your employer. Funding for it comes directly off of your paycheck and can be matched by your employer. This is a key thing as matching by our employer can really help people boost their 401(k) much quicker! However, unlike other savings accounts, there is no government insurance for the assets held in this account. Employees also get to choose what they invest in their 401(k). I have some friends who just stick it in market ETFs while others may choose to buy and hold specific stocks the choice is up to you.
That is what I think is key here is the choice is up to you. While typically the plan that a company offers does have some limits on what you can purchase there is typically still a nice variety. Over-the-counter stocks and/or stocks that are not above a certain price are also typically eliminated to try and minimize risk. High-risk high reward options are also available to a person though. This can be seen with Cathie Wood's ARK funds. They are options that are available in a ton of people's funds however if you look at the fund's performance in the last year it is hitting 52-week lows and has fallen from $135 a share to $44 a share. The government though does not prohibit these risky things from being offered though. Even some single stocks like Peloton are available and that sucker went from $100 a share to $10 in no time.
We must ask ourselves then why is it that Bitcoin and other cryptos are being held to a standard that we do not hold other companies and funds to? Is it because these companies and funds have faces behind them that the government can go after if it fails? If that is the case then it is an awful idea just look at Bernie Madoff who was able to keep his scam going for years and possibly could have died from old age by the time he was caught. I could see there being some sort of limit like you cannot have 100% of your account in Bitcoin but something like that should be widespread for all investments. Fidelity themselves is already limiting it to 20% and this is the workers' money after all so why should the government get to tell you how you can save it!
As I am writing this Bitcoin is being crushed but you know what? The whole stock market is! It is not like Bitcoin is tanking all by itself it got drug down by the market! I have yet to understand and probably never will why it is any business of a politician to tell me how to save the money I earn working. People who have these accounts are adults and should be able to make adult decisions. We do not need the Federal Government looking over our shoulder and going oh no don't do that or that or that it's not their place.
Please know I am not a financial advisor I am just someone who picked up on a trend and wanted to express it! Makes sure you always do your own research and never invest money you cannot afford to lose! If you enjoyed this article and would like to further support me below are a couple of referral links that if you used when signing up I would appreciate it! Also, follow me on Twitter @Cje95_
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