Elizabeth Warren, Fidelity and Bitcoin

by James · November 23, 2022

The FTX disaster has pushed politicians and regulators to introduce new rules for the crypto sector. This includes Elizabeth Warren, the powerful Democratic senator who is seen even by her critics as brilliant and principled, but who has an irrational hatred of crypto. On Tuesday, Warren struck. In a letter, she and two other Senate Democrats declared that a response to the FTX mess should include … stopping people from holding Bitcoin in their retirement accounts. Huh?

The letter in question – also signed by Sens. Dick Durbin (D-Ill.) and Tina Smith (D-Minn.) — were directed at Fidelity Investments, which holds about $2.4 trillion in 401(k) investments on behalf of its clients , and which recently allowed clients to allocate part of their contributions—which are voluntary and deducted from workers’ paychecks—to Bitcoin.

It is important to note that Fidelity does not decide on its own to put retirement funds into Bitcoin or even encourage people to do so. It simply gives them the ability to add Bitcoin exposure along with exposure to stocks, bonds, precious metals, index funds, emerging markets and a variety of other investments. If you’re a Fidelity client convinced that Bitcoin is a terrible investment, don’t buy into it—instead, choose from hundreds of other assets, including some that are even riskier and more volatile.

So why does Warren think that a future FTX – a company run as an offshore casino by a Bernie Madoff-like figure – can be prevented by cutting off access to Bitcoin? It doesn’t make much sense except as part of Warren’s larger ideology that banks and finance are inherently bad, while crypto is particularly evil. Like an op-ed by Warren in yesterday’s The Wall Street Journal makes it clear that she does not want to regulate crypto. She wants to destroy it completely.

This is a foolish position since, as I have said more times than I can count, crypto is fundamentally a technology. And there are varying degrees you can and should regulate a given technology, but there is no such thing as going back to an earlier time without that technology. Warren’s progressive millennial allies, including Reps. Alexandria Ocasio-Cortez (DN.Y.) and Ritchie Torres (DN.Y.), understand this and are not anti-crypto. But Warren, like politicians of an earlier era who just wanted to get rid of large parts of the Internet, isn’t going to change — but may become irrelevant.

Finally, Happy Thanksgiving to our American readers. We at Fortune will turn our attention from FTX to Turkey and football for a few days and will be back in your inbox on Monday. If you’re looking for something to read in the meantime, treat yourself to Leo Schwartz’s stunning feature about his week in SBF’s corrupt and decadent Bahamas.

Jeff John Roberts
[email protected]
@jeffjohnroberts

DECENTRALIZED NEWS

Lawyers told a US bankruptcy court that many of FTXits assets have been stolen, and described the situation as among the “most abrupt and difficult corporate collapses in the history of corporate America.” (AP)

Several World Cup teams have cryptocurrencies whose price is loosely linked to their success, and on Monday the value of Argentina’s plunged 20% after La Albiceleste lost to Saudi Arabia in a shocking upset. (Fortune)

SBFthe law professor’s father helped his son’s company spread money to a wide variety of charities and PACs, mimicking a lobbying strategy used by large corporations, but on a much faster scale. (NEW)

In a typical conversation to investors, Sequoia Capital apologized to them for losing $150 million on FTX. (WSJ)

This is reported by a commercial pub in Hollywood apple is close to breaking out Netflix and Amazon for the film rights to the upcoming FTX book by bestselling author Michael Lewis Moneyball and The big short. (Deadline)