Fidelity Investments had recently made an announcement that seems to have drawn the ire of Janet Yellen, the US Treasury Secretary. The company announced a plan that would enable investors to add cryptocurrency to their 401(k) retirement accounts, but Yellen believes that there is a great deal of risk associated with it.
The New York Times had organized an event in Washington and Yellen spoke there. She said that she would not recommend anyone to make such a move when they are saving for their retirement because it comes off as an extremely risky investment.
Stern Response to Crypto Retirement
The crypto retirement option is the first one of its kind and this makes Fidelity Investments the first company to offer one. There are 23,000 companies that offer retirement accounts via Fidelity and the crypto retirement option will be available to them this year. The Labor Department in the US has already expressed its opposition against this plan and Yellen added her support to it.
She was questioned about the announcement and did not hesitate in sharing her thoughts. Representatives of the Labor Department were also present, as were Senators Cynthia Lummis, Tommy Tuberville and Elizabeth Warren, when the discussion about digital currencies was initiated.
The Labor Department has already threatened legal action against Fidelity Investments and have asked for a compliance report. Apart from that, a number of senators have also questioned how Fidelity Investments is planning on addressing the risks associated with addition of crypto to retirement accounts.
However, it should be noted that there is also a group of senators that are pro crypto. Hailing from Alabama, Senator Tommy Tuberville had recently talked about allowing investors to add crypto to their retirement accounts under Financial Freedom Act. Likewise, Senator Cynthia Lummis from Wyoming has also presented a bill proposal for legalization of cryptocurrencies.
Possibility of Crypto Retirement Savings
A lot of financial planners have already stated that adding crypto to a portfolio that is well-balanced can be a smart move. They have also disclosed that their clients are already making this move instead of doing this with retirement plans sponsored by their employers. The announcement from Fidelity Investments has been regarded as a watershed moment for crypto because it shows how much it is becoming mainstream, not just in the US, but in the entire world.
Fidelity is known as the country’s leading pensions provider and there are more than 20 million people using its services. While the possibility of holding crypto might be a bit scary to some people because of its volatile nature, experts have said that diversity and small allocations of crypto can make it a beneficial move for your retirement savings.
This is due to the fact that crypto movements are independent of other assets and a weak correlation is the best recipe for diversification. It is considered a wise move to add crypto in small percentages to retirement accounts, but this should be done slowly in order to combat the volatility of the asset class.
