US senators urge Fidelity to drop BTC retirement plan after FTX collapse

U.S. Senators Elizabeth Warren, Dick Durbin and Tina Smith asked Fidelity Investments to rethink its decision to grant retirement plan exposure to Bitcoin.

By Megha Chaddah2022-11-22 4:58 AM UTC

WASHINGTON – OCTOBER 15: Save Darfur activist Ken Archer promotes the organization's "Divest For Darfur" campaign while reflected in the front window of a Fidelity Investments Investor Center blocks from the White House October 15, 2007 in Washington, DC. The Save Darfur coalition claims that Fidelity Investments, JP Morgan Chase, Capital Group/American Funds and Vanguard are among the largest U.S.-based mutual fund companies invested in PetroChina, a Chinese oil company the coalition claims is funding the ongoing genocide in the Darfur region of Sudan. (Photo by Chip Somodevilla/Getty Images)

U.S. Senators Elizabeth Warren, Dick Durbin and Tina Smith have asked Fidelity Investments, one of the country’s largest financial services providers, to rethink its decision to grant retirement plan participants exposure to Bitcoin in the aftermath of the FTX implosion, in a letter released on Monday.

Fast facts

The lawmakers said the digital asset industry has grown more volatile, tumultuous and chaotic since their previous letter sent in July 2022, and that these are features of an asset class no person planning for retirement should go near.

They added that the recent implosion of cryptocurrency exchange FTX made it clear that the digital asset industry has problems and is plagued by charismatic players, opportunistic fraudsters and self-proclaimed investment advisors promoting financial products with little to no transparency.

The senators wrote that deceptive and potentially illegal actions of a few have impacted valuations of Bitcoin and other digital assets even as the full extent of FTX’s collapse is still unfolding.

As Bitcoin prices drop to two-year lows, Fidelity should protect sponsors and participants and reconsider its decision to offer Bitcoin exposure, the lawmakers said.

Fidelity Investments is one of the largest 401(k) providers in the world and announced a plan in April 2022 where individuals could allocate a portion of their retirement savings to Bitcoin.

Separately, after FTX collapsed, the Ontario Teachers’ Pension Plan said it will be writing off its US$95 million investment in FTX to zero by the end of this year.