Following the failure of cryptocurrency exchange FTX, U.S. Senators today wrote another letter to financial behemoth Fidelity Investments cautioning it not to provide Bitcoin to its clients.
Senators Tina Smith of Minnesota, Richard Durbin of Illinois, and Elizabeth Warren of Massachusetts signed a letter requesting that Fidelity discontinue its 401(k) Bitcoin plan.
Boston-based America’s top 401(k) provider is Fidelity, one of the largest asset managers in the world. The business introduced a new product in April that gives businesses and employees who choose to participate access to Bitcoin.
However, in May, Senators Warren and Smith wrote to Fidelity to warn them against the plan. A new letter was issued this time, and Senator Durbin added his signature to it.
In the letter sent on Monday, Fidelity Investments was urged to “seriously reconsider its decision to permit 401(k) plan sponsors to expose plan participants to Bitcoin.”
The senators continued, “It is patently evident that the digital asset business has major challenges as demonstrated by the recent collapse of FTX, a cryptocurrency exchange.
The financial services sector is rife with charismatic up-and-comers, cunning con artists, and self-declared investment advisors who push financial products with little to no transparency.
One of the biggest cryptocurrency exchanges in the past, FTX went out of business last month after losing billions of dollars in investor money. The exchange was allegedly using client funds through its sibling trading company Alameda Research to place dangerous investment wagers.
According to a document submitted by FTX on Saturday, the exchange owes its top 50 creditors $3.1 billion.
The former CEO of the exchange, Sam Bankman-Fried, was among the top 20 largest donors to Joe Biden’s 2020 U.S. presidential campaign, giving $5.2 million. This is significant because FTX is one of the biggest financial backers of political campaigns.
The crypto market was shaken by the crash, and most digital assets fell after the news.
The letter today noted that the U.S. was “already in a retirement security crisis” and that “retirement savings should not be exposed to undue risk” in order to make matters worse.
Fidelity presently manages more than $9.9 trillion and has made significant progress in the realm of digital assets.
An early-access queue for its newest cryptocurrency product, an app that lets retail investors trade Ethereum and Bitcoin from their phones without incurring commission costs, was unveiled earlier this month.