Fidelity Investments is the first major retirement account custodian to allow investors to include bitcoin in their 401(k) accounts. What are the implications of this historic move, and should investors add bitcoin to their retirement accounts?


8 Implications of Bitcoin as a Retirement Account Investment Asset

Despite the U.S. Labor Department guidance for fiduciaries to exercise “extreme care” before allowing cryptocurrency investing in retirement accounts, Fidelity is moving ahead with its plans. There are least eight long-term consequences from Fidelity leading the way in bitcoin as a retirement account investment.

  1. Volatility could lead to wild fluctuations in 401(k) valuations – Bitcoin is well known as a high-risk, volatile asset. Consumers who opt to include bitcoin in their 401(k) accounts could see tremendous valuation swings from day to day. However, Fidelity is limiting bitcoin allocations to 20 percent of customers’ total 401(k) value.
  2. Other digital assets could be included later – While Fidelity is currently only allowing bitcoin in 401(k) accounts, the company could include other digital assets later. That may include other cryptocurrencies such as Ethereum, Polygon, and Cardano, as well as digital assets such as non-fungible tokens (NFTs).
  3. More investment fiduciaries could begin to offer crypto options for 401(k)s – Fidelity Investments is a leader in the 401(k)-custodian space. This could lead to other fiduciaries making similar offers to their customers.
  4. It could spur bitcoin acceptance among employers – Since consumers invest into 401(k)s through their employers, this could spur greater bitcoin acceptance among employers. That could be manifested in any number of ways including offering payment to employees in bitcoin, allowing direct deposit of bitcoin into 401(k) plans by way of automatic withdrawal, and using bitcoin as payment for commercial transactions.
  5. Crypto investing may go mainstream – 401(k)s are often the first exposure many consumers have with investing. Opening the door to bitcoin as an option for 401(k) investors could lead to more of them investing in cryptocurrency overall.
  6. If widely adopted, millions of BTC in 401(k) accounts would bolster the value of bitcoin – Bitcoin has been in the news lately as its price has fallen below $30,000, the lowest it’s been since July 2021. However, bitcoin’s value has been known to fluctuate with supply and demand. If more consumers begin investing in bitcoin through their 401(k)s, it could lead to higher floors. Since 401(k)s are long-term investment vehicles, designed for retirement nest eggs, when millions of dollars are stored in these long-term accounts, the value of bitcoin is likely to remain steadier while its value is likely to maintain higher positions over time.
  7. Mass adoption could lead to a lower volatility index – The Bitcoin Volatility Index (BVI) measure show much bitcoin’s price fluctuates relative to its price within a certain period. Over time, BVI has lowered from 8.26 percent in 2011 to 4.56 percent in 2021. It will likely level out as more people buy and hold bitcoin long term, which could be facilitated by many 401(k) account holders holding more bitcoin.
  8. Regulation could impact bitcoin as a 401(k) investment – In March 2022, President Joe Biden signed an executive order addressing cryptocurrency regulation. While regulation has not yet impacted cryptocurrency as retirement account assets, it’s possible that future regulation will. In fact, Fidelity’s foray into this realm could prompt earlier regulation regarding cryptocurrencies as retirement account assets. It is likely that regulatory agencies will issue some guidance on crypto assets as retirement account assets sometime in the future.

Not all the ramifications of bitcoin investing in retirement accounts are negative, nor are they all positive. Where we go from here is anyone’s guess, but the fact that a 401(k) fiduciary with Fidelity’s reputation and standing is implementing a strategy for consumers to include bitcoin in their 401(k)s means that the world is changing and bitcoin is at the center of that change.



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