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Cryptocurrency enthusiasts celebrated the move, which will be implemented in mid-2022.
But before you get too excited, understand that Bitcoin won’t be showing up on your 401 plan’s investment menu immediately.
And because of their fiduciary duty—placing the needs of plan participants above all else—companies may be reluctant to provide immediate access.
“We have grave concerns with what Fidelity has done,” Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, told The Wall Street Journal.
In addition to the potential legal risks to employers, it’s unclear just how appropriate of a retirement investment Bitcoin is.
The first Bitcoin transaction in history was completed just 13 years ago, so it doesn’t have the long-term track record of success that stocks and bonds do.
Owen Murray, director of investments for Horizon Wealth Advisors, says it’s still extremely difficult to determine the true values of Bitcoin and other cryptocurrencies from a fundamental perspective.
Sweeney says Fidelity’s decision will put pressure on other major retirement plan providers, such as Vanguard and Charles Schwab, to offer Bitcoin options for retirement investors as well.
He is also a staff writer at Benzinga, where he has reported on breaking financial market news and analyst commentary related to popular stocks since 2014.