Fidelity to let 401(k) customers add bitcoin to their retirement accounts

Fidelity Investments customers with a 401 (k) account will be able to invest a portion of their account funds in bitcoins beginning at the end of the year, the first time a major retirement plan provider has added cryptocurrency to their menu.

Dave Gray, head of Fidelity Retirement Jobs, said Tuesday that the company expects blockchain technology, the basis of cryptocurrency, to play a major role in financial services. Fidelity is the largest retirement service provider in the country, managing plans for 23,000 employers.

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Although most financial experts consider it highly unstable, bitcoin reached its highest price last year partly because more companies began to accept it as a form of payment. As another sign that cryptocurrency is gradually becoming a major investment, Wall Street companies have created exchange-traded funds around cryptocurrency futures.

Despite the risks of wild price changes, approximately 40 million Americans have invested in cryptocurrencies, including about 43% of men aged 18 to 29, according to the Pew Research Center. Fidelity said it estimates that approximately 80 million individual investors in the U.S. own or have previously invested in a digital currency.

Employees who choose the new Fidelity option will have their bitcoin retained and managed in a so-called digital asset account, which is separate from the main 401 (k) cube. Fidelity plans to limit how many times the account holder can buy and sell bitcoins.

Fidelity offers bitcoins even though last month the U.S. Department of Labor expressed “serious concerns” about employees adding cryptocurrencies to their retirement accounts. In a March 10 blog post, Deputy Secretary Ali Khawar said department officials were concerned about the risk that cryptocurrency poses to investors.

“Cryptocurrency prices have been extremely volatile,” Khawar wrote. “For example, in just one day last December, the price of bitcoin fell by more than 17%. These big changes could leave participants vulnerable to significant losses.”

Khawar said companies should “shake extreme care before considering adding a cryptocurrency option” for employees.