Massachusetts Democratic Senator Elizabeth Warren again flung renderingits decision to allow Bitcoin in retirement savings plans, especially in light of the recent collapse of crypto exchanges FTX.
Warren, along with Illinois Democratic Sen Dick Durbin and the Minnesota Democratic senator Tina Smithraised concerns this summer over Fidelity’s decision, announced in April, to allow the 23,000 companies that use its 401(k) platform to allow their plan participants to allocate as much as 20% of their 401(k) savings to Bitcoin.
On Monday, the senators pointed to the collapse of FTX — which declared bankruptcy and is the target of several lawsuits and investigations — as an indication of how dangerous the crypto space really is.
“The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear that the digital asset industry is in serious trouble. The industry is full of charismatic wunderkinds, opportunistic scammers and self-proclaimed investment advisors who market financial products with little or no transparency,” the senators wrote to Fidelity’s CEO, Abigail Johnson.
Fidelity was at the forefront of traditional financial institutions embracing cryptocurrency: The firm began mining bitcoin in 2014 and launched its digital assets four years later.
This year, in addition to allowing Bitcoin in 401(k)s, Fidelity announced a new crypto-based exchange-traded fund. And earlier this month, Fidelity created a waiting list for commission-free trades in Bitcoin and Ethereum.
Fidelity has also been a supporter of ambitious but unorthodox plans on Sam Bankman-Friedits FTX.
President of Fidelity Digital Assets Tom Jessop was among many proponents who wrote comment letters to Commodity Futures Trading Commission in support of FTX’s proposal to allow its derivatives to trade directly with investors on margins generated via algorithms rather than intermediaries such as brokers, according to Bloomberg.
“We believe innovations such as the proposed FTX margin model generally help to reduce systemic risk, increase investor protection and facilitate broader access to financial products in principle,” Jessop wrote, but added that several questions remained about the model. according to Bloomberg.
Other proponents of the margin model included faculty members at Georgetown and University of Chicago, Fortress Investment Group and Susquehanna International Group, wrote the news service earlier this month.
The FTX collapse, meanwhile, continues to attract scrutiny. A Reuters report cites property records indicating that FTX, Bankman-Fried’s parents and senior FTX executives purchased properties worth a total of $121 million in the Bahamas over the past year.
