Two U.S. senators have written to Fidelity Investments CEO Abigail Johnson, asking why the company decided to offer cryptocurrency as a stand-alone investment in clients' 401(k) plans.
"Investing in cryptocurrencies is a risky and speculative gamble, and we are concerned that Fidelity would take these risks with millions of Americans' retirement savings," said the Wednesdayletter from Sens. Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.).
The letter followed Fidelity's April 26 announcement that participants in DC clients' plans can place up to 20% of their 401(k) plan accounts in a stand-alone cryptocurrency investment called a digital assets account.
Fidelity, which is offering bitcoin in the account, said sponsors can choose to limit how much participants can invest in the cryptocurrency.
Ms. Smith is a member of the Senate Committee on Health, Education, Labor and Pensions. Ms. Warren is a member of the Senate Special Committee on Aging.
The senators' pointed to a March 14 "compliance assistance release" from the Department of Labor telling defined contribution plan sponsors to "exercise extreme care" in considering if cryptocurrency is an appropriate investment in a retirement account.
They referenced a passage in the DOL document that said the agency had "serious concerns regarding the prudence of a fiduciary's decision to expose 401(k) plan's participants to direct investments in cryptocurrencies." They also cited DOL's concerns, identified in the document, about "the significant risks of fraud, theft and loss" related to cryptocurrency.
According to the letter, the company has a May 18 deadline to answer questions, including:
A Fidelity spokesman could not be immediately reached for comment.