Fidelity Investments Rolls out a Bitcoin 401 (k) Plan, Taps MicroStrategy as the First Client

Fidelity Investments, a Boston-based multinational financial services corporation, will, for the first time, allow employers to invest in Bitcoin on behalf of employees through a special crypto 401 (k) plan.

According to a Tuesday report, the financial service provider and crypto supporter said some of the 401 (k) plans it offers would soon allow employers to invest in Bitcoin securely. This offer will be dispensed through a dedicated “Digital Asset Account” charging between 0.75 to 0.90 percent per annum in management fees.

Fidelity Investments assess that the cryptocurrency industry, valued at over $1.86 trillion as of April 26, would be a critical cog in the multi-trillion financial industry in the years to come.

Dave Gray, the Head of Workplace Retirement Offerings and Platforms at Fidelity, believes access to digital asset investing is beginning to open up.

Fidelity believes that blockchain technology and digital assets will be a much larger part of the financial industry’s future. We think that the investment choices and opportunity to get access to digital assets will increase over an entire spectrum of products and services. We fully expect that the digital assets account is really a beginning.

Employees can invest Up-to 20% in Bitcoin

Notably, the funds wouldn’t be pooled. Instead, accounts will be segregated with separate accounts for employees. Depending on an employee’s risk tolerance, they can invest up to 20 percent of their 401 (k) balances into Bitcoin. However, because Fidelity Investment bars retail investors from participating, sponsoring employers may set a lower limit.

Bitcoin digital accounts would hold Bitcoin and other highly liquid money market financial instruments like Treasury bills to enhance liquidity.

Meanwhile, acquired Bitcoin would be custodied by the Fidelity Digital Assets platform. The platform is licensed in the U.S., Canada, and the U.K. Its license in the U.K. was granted by the Financial Conduct Authority, approving its digital asset custody and trade execution business.

MicroStrategy Hops In

Any of their 23,000 companies in the Fidelity Investments’ rooster can decide to invest their employees’ funds in Bitcoin 401 (k). Thus far, MicroStrategy, a Business Intelligence firm and the world’s largest holder of Bitcoin, will be the first plan sponsor by the end of the year.

By the close of December 2021, the corporation was overseeing over $2.7 trillion of assets from over 20.4 million investors.