Fidelity, the largest retirement plan provider in the United States, announced plans to offer bitcoin in 401(k) retirement accounts to its account holders later this year. The company is set to allow investors to allocate up to 20% of their 401(k) accounts to bitcoin, though employers will have the ability to lower that cap, Dave Gray, head of workplace retirement offerings and platforms at the asset manager, told the Wall Street Journal.
The Boston-based asset manager, which administers plans covering more than 20 million participants representing $2.7 trillion in assets, said the launch is expected to take place by midyear, debuting at bitcoin supporter Michael Saylor's firm MicroStrategy, which holds billions of dollars of the asset on its balance sheet.
The offering, which Fidelity is calling its Digital Assets Account, will hold bitcoin and short-term money market investments to provide the liquidity investors would need to engage in daily transactions if they choose to do so. The currency will be held in custody with Fidelity Digital Assets to ensure "institutional-grade security," the company said.
The move from Fidelity, which administers plans covering more than 20 million participants representing $2.7 trillion in assets, comes just a month after the U.S. Department of Labor told plan fiduciaries to “exercise extreme care” before offering cryptocurrency in retirement accounts. The agency cited crypto's historical volatility, potentially inflated valuation and fears about custodial issues given the near-impossibility of recovering funds from a wallet if one were to forget their password.
While the offering will launch with bitcoin as its only digital asset, Fidelity plans to offer other cryptocurrencies in the future, Gray said. The company has been at the forefront of its peers in its digital asset offerings, launching a custodial service for institutional investors in 2018 and creating a bitcoin fund for accredited private wealth clients in 2020.
Bitcoin is trading down about 40% from its high in November last year.