Fidelity Investments, the world's fourth-largest asset manager, wants to enable its employees and clients to diversify their 401(k) retirement plans with bitcoin investments. In doing so, the multinational financial services firm becomes the first major provider of crypto retirement plans.
As reported by the WallStreet Journal, later this year employees will be able to start adding cryptocurrencies to their retirement plan. In addition, more than 23'000 companies that hire Fidelity to manage their retirement plans will be able to offer Bitcoin to their employees for retirement diversification. The endorsement from the nation's largest retirement plan provider suggests that cryptocurrencies are making further inroads into the traditional financial world.
Crypto investments in retirement plans not possible so far
Under the plan, Fidelity would allow savers to invest up to 20% of their savings in Bitcoin - though that threshold could be lowered by plan sponsors. Other digital assets are expected to be made available in addition to Bitcoin in the future. Crypto investments are virtually non-existent in 401(k) plans to date.
"There is a need for a variety of products and investment solutions for our investors. We firmly believe cryptocurrencies will impact the way future generations think about investing, both in the short and long term." - Dave Gray, Head of Corporate Retirement and Platforms at Fidelity Investments
Financial industry heavyweight positions itself
Fidelity's endorsement of Bitcoin could lead to broader adoption among employers. The investment firm has seen an organic growth in interest from its clients - especially those with younger employees, he said. A number of companies across a broad spectrum of industries are in the evaluation process, he said. The financial services firm manages plans with more than 20 million participants and $2.7 trillion in assets under management.
Fidelity has a growing presence in the cryptocurrency business, including a trading and custody platform launched in 2018 that targets hedge funds and other qualified investors. The crypto arm of the financial heavyweight has also been participating in funding rounds of various crypto companies for some time. Most recently, Fidelity invested in USDC issuer Circle, along with BlackRock and other asset managers.
