The Department of Labor in the United States has recently aired its concerns over the proposition of adding Bitcoin as a portfolio diversification option for 401K account holders. The proposal was introduced by asset management firm Fidelity for its clients hailing from the United States. Commenting on the matter, Fidelity’s acting assistant secretary Ali Khawar explained the matter on behalf of the government organization.
Khawar told the interviewers from the Wall Street Journal yesterday that Employee Benefits Security Administration has grave concerns regarding the matter. It is worth mentioning that a 401K account is a retirement benefits account that saves a certain amount of money from the salary of a person and invests it in different projects to generate funds for the holder. Khawar’s branch of the Labor Department is responsible for screening such retirement plans by the companies under its jurisdiction.
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In the past, the Securities and Exchange Commission of the United States has stated that cryptocurrencies are highly volatile and carry a massive risk factor for investors. It seems that the impression about digital assets among government administrative and financial units has largely remained unchanged despite the increasing popularity of cryptocurrencies all around the world.
Bitcoin as an Asset Class
Speaking to the media, Khawar claimed that cryptocurrencies are seen as an asset class that is predominantly dependent on market speculation. He further explained that many people with little to no experience in investing want to get invested in digital assets due to the ongoing FOMO. He also claimed that the Labor Department has been monitoring Fidelity’s plans to diversify their 401K reserve with cryptocurrencies such as Bitcoin for 23K companies.
According to Khawar, companies like MicroStrategy that are themselves heavily invested in Bitcoin have assumed the position of flag bearer by allowing its employees to avail the Bitcoin investment option for their 401K accounts. MS employees have the liberty to dedicate as much as 20% of their 401K account reserves to Bitcoin. He further explained that retirement amount money is considered a form of crucial life insurance policy for the working class in America.
He also claimed that the executive classes that consist of millionaires and billionaires who can afford to absorb such big risks are not excluded from the list. The main cause of uncertainty and fear around Bitcoin investments is the lack of regulatory infrastructure around the nascent industry. Recently, the Biden administration has been working on a crypto executive order to create a report on the economic impact of digital currencies.