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What financial advisors need to know about cryptocurrencies. U.S. employers could set an upper limit on the amount of savings earmarked for bitcoin, and the maximum limit is expected to not exceed 20%. However, the measure would allow several first-time investors to expose themselves to bitcoin without having to create a separate account on a cryptocurrency exchange.
A 401 (k) account is a company-sponsored retirement plan in the U.S. In the United States, to which employees can contribute income while employers can match contributions. Employees receive a tax break on the money they contribute, while contributions are automatically withdrawn from employee paychecks and invested in the funds they choose. The fees for bitcoin investments in Fidelity 401 (k) accounts would range from 0.75% to 0.90%, depending on the amount and the employer, and would be maintained on their own custody platform.
An additional trading fee would be charged, which has not been disclosed at the time of writing this article. Fidelity also plans to create educational materials for investors. Business analytics firm MicroStrategy (MSTR) is said to have already signed on to the plan. The firm has billions of dollars in bitcoin and its founder, Michael Saylor, is a strong supporter, often tweeting outlandish opinions about the asset.
The Wall Street Journal and The New York Times previously reported the news. In November, Fidelity launched Canada's first regulated offering offering bitcoin custody and trading services to institutional investors in the country. He then launched two publicly traded bitcoin funds in December on the Toronto Stock Exchange. This year, Fidelity launched similar products in Switzerland and Germany.
Meanwhile, not everyone is okay with companies offering exposure to bitcoin in their 401 (k) offerings. The agency emphasized at the time that providers must provide appropriate information to potential investors about the risks involved in investing in cryptocurrencies, including volatile prices and the ever-changing regulatory environment.