Fintech startups move in amid growing interest in Fidelity Bitcoin 401(K)
Fidelity Investments said it has seen strong interest from employers in its Bitcoin 401(k) offering, so fintech startups have begun to emerge to meet the demand.
Fidelity said in a statement that “client interest has not only been strong, but also spans a wide range of industries and company sizes.” Business intelligence firm MicroStrategy run by Bitcoin evangelist Michael Saylor became the first company to sign up, with more expected soon.
According to Fidelity, the first employers to offer Bitcoin as an option in their 401(k)s will have it available this fall. This is because employers considering including Bitcoin in their 401(k) plans must perform due diligence and obtain the necessary approvals beforehand. While that process could take up to several months, Fidelity said it would need about 90 days to implement it.
Fidelity Investments made a splash in the retirement planning industry when it announced its intention to make Bitcoin available to 401(k) plans earlier this year. The plan administrator oversaw $2.7 trillion in 401(k) assets among 20.4 million investors as of Dec. 31.
Following the announcement, Fidelity faced scrutiny from both the Labor Department and Congress over the offer. “We have serious concerns with what Fidelity has done,” Acting Assistant Secretary of the Employee Benefits Security Administration Ali Khawar told the Wall Street Journal. The administration regulates company-sponsored pension schemes within the Department of Labour.
Meanwhile, Democratic Senator Elizabeth Warren sent a joint letter to Fidelity Investments asking what steps the firm will take to address “the significant risk of fraud, theft and loss posed by these assets.” Meanwhile, Fidelity said it is continuing a “respectful dialogue” with regulators and policymakers.
However, the government scrutiny has done nothing to dampen the enthusiasm of several fintech startups looking to capitalize on the demand for Bitcoin 401(k)s. For example, the Bitcoin IRA allows customers to roll over their 401(k)s or IRAs to start buying crypto. According to COO Chris Kline, Bitcoin IRA has 150,000 users and $2 billion in assets under custody.
Meanwhile, ForUsAll is a 401(k) provider that is currently working with Coinbase Global to provide a platform that will allow workers to invest in cryptocurrencies. According to a spokesman, ForUsAll plans to launch the Alt 401(k) product later this summer. “We have over 150 customers on the crypto waiting list,” the spokesperson said.
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