Fidelity to start providing retirement payments in cryptocurrencies

by May 5, 2022 0 comments

The largest retirement plan provider in the USA, Fidelity, has announced that it will offer bitcoin in retirement accounts to its account holders.

The company will allow investors to allot up to 20% of their accounts to Bitcoin. However, the employers of the account holders will have the power to lower the ceiling according to Dave Gray, Head of Workplace Retirement Offerings and Platforms, Asset Manager.

Boston-based asset manager Fidelity administers plans covering over 20 million account holders representing $2.7 trillion in assets. The company was quoted stating that the launch is expected to take place by mid-2022.

The offering, that Fidelity has dubbed ‘Digital Assets Account’, will hold bitcoin and short-term money market investments to provide the liquidity investors need to engage in daily transactions. The currency will be held in custody with Fidelity Digital Assets to ensure “institutional-grade security,” the company added.

Fidelity’s move which administers plans covering over 20 million account holders representing $2.7 trillion in assets, comes barely a month after the US Department of Labour directed its plan fiduciaries to “exercise extreme care” before offering cryptocurrency in retirement accounts.

The governmental agency cited crypto’s well-known volatility, inflated valuation and fears of custodial issues given the difficulty of recovering funds from a wallet if one were to forget their passwords, as reasons for the caution to be exercised.

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 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 currently trading down about 40% from its high in last year’s November.

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