MicroStrategy was the very first firm to take advantage of the service. Fidelity will soon begin allowing those who are eligible to put aside a percentage of the 401(k) savings in Bitcoin, the company announced on Tuesday. Employees will be granted access to the feature when their employer approves the option and the option Fidelity promises to roll out by mid-2022.
Although Fidelity does not specify the amount employees can put into cryptocurrency in its announcement, however, it is reported by the Wall Street Journal says that employees can invest up to 20% of their retirement savings in Bitcoin. Dave Gray, Fidelity’s head of retirement plans for workplaces and platforms, told the WSJ that Fidelity intends to provide support for additional cryptocurrencies later in the future.
“As a leader in digital assets, we are thrilled to be the first to offer employers exposure to bitcoin for the core lineup of 401(k)s that reflects our commitment to meeting their evolving needs and our belief in the promise of blockchain technology for the financial industry’s future,” Gray said.
As reported by Fidelity Business Intelligence company MicroStrategy was the very first company to announce that it has embraced the Bitcoin retirement plan option. The company, headed by Bitcoin advocate Michael Saylor, acquired $250 million worth of Bitcoin in the year 2020 and has continued to invest in Bitcoin to support its financial plan. However, there was a problem when it was the Securities and Exchange Commission (SEC) protested against how MicroStrategy reported its Bitcoin properties in one of its SEC filings the last year. According to Bloomberg, MicroStrategy used non-GAAP measures or methods for reporting earnings that don’t depend on Generally Accepted Accounting Principles (GAAP) to report their digital assets.
It wasn’t the first time MicroStrategy had a run-in with the SEC In 1999, they were involved in a settlement with the SEC agreed to pay Saylor and the other executives for $11 million for accusations of accounting fraud and asserted that MicroStrategy “materially overstated its revenues and earnings” following the time that MicroStrategy was listed on the stock exchange from June 1998 to March 2000. The executives paid disgorgement of $10 million, and a civil penalty of $350,000 for each one of them and with no “admitting or denying the Commission’s allegations.”
There could be some backlash from Fidelity regarding its latest offering. In the last month, Fidelity was warned by the US Department of Labor advised fiduciaries against providing the option of saving for retirement with crypto “in an effort aimed at protecting the retirement savings of U.S. workers,” warning that this type of investment carries “significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft, and loss.” President Joe Biden has also signed an executive order intended to encourage greater regulation of crypto across the US.