Fidelity will allow pension accounts to invest in bitcoin

Crypto advocates and curious people are suddenly finding out that asset management giant Fidelity will start allowing investors to put bitcoin into their 401(k) retirement savings accounts. From a tax perspective, this appears to be an easy way for individuals to gain beneficial access to this emerging asset class. However, there are still some important factors to consider.

The service will be available to participants in Fidelity’s employee-sponsored retirement plans later this year, but only if the employer chooses to offer it. 401(k) annual gains are tax-deferred, which eliminates the hassle associated with cryptocurrency investments and annual tax reporting.

According to The Wall Street Journal, the fees incurred by investing in Bitcoin in a Fidelity retirement account will be between 0.75% and 0.90%, plus the cost of investing in Bitcoin in the U.S. between Coinbase, Gemini, Kraken, FTX, Binance America, etc. Transaction fees in the middle range of spot market transaction fees offered by most major exchanges. Additionally, employees can only invest up to 20% of their current account balance in Bitcoin.

The only company currently signed up for the service is business analyst firm MicroStrategy, led by bitcoin bullish billionaire Michael Saylor. It is the world’s largest bitcoin holding company with an inventory of more than $5 billion. Likewise, employers must agree to provide this service, although some may hold back due to the asset’s volatility.

In 2013, people could buy a bitcoin for less than $300; ​​today, that price has turned into $40,000. While this is huge growth, it hasn’t been smooth sailing. Bitcoin and other leading crypto assets have lost more than 50% of their value on multiple occasions, many of which occurred before the industry entered the mainstream. Many investors may recall that Bitcoin approached $20,000 at the end of 2017 and then lost 75% of its value in the following months. Bitcoin holders will say that the cryptoasset recovers more after each knockout. Many also believe that navigating this boom-bust cycle is a must, but it may not be for everyone.

While some may be excited about Fidelity letting customers try bitcoin investing, the government may not be so happy. First, U.S. federal regulators have been very cautious about giving investors easy access to the crypto spot market, even Bitcoin. The U.S. Securities and Exchange Commission (SEC) is known to have yet to approve a bitcoin spot ETF, although it has approved some that offer exposure to bitcoin futures contracts, often due to the market’s vulnerability to fraud and manipulation.

Asset volatility is something to consider when it comes to retirement planning. Bitcoin has fallen nearly 40% from its all-time high of just under $70,000 in November, and those who have retired and will likely not have the funds or time to ride out these volatility cycles. Last month, the U.S. Department of Labor issued a notice expressing several concerns about investing retirement funds in cryptocurrencies. Chief among them are the extreme volatility in the market, the emerging but ambiguous regulatory landscape related to crypto assets, the inability of investors to make informed decisions, and the safety of holding crypto assets, which have become hackers after all. The goal. The department’s concerns are important because it has a say in the regulation of employer-sponsored programs.

In addition, it was reported that Coinbase, the largest crypto exchange in the United States, had partnered with a retired company last July to provide services similar to the above. “The crypto space itself is fascinating and interesting when it first started, but it’s still early days stage, definitely not for retirement investing. The truth is, for retirement investing, the purpose should be growth and volatility should be limited. The older you get, the less you want your portfolio to go up and down because it makes It’s hard to plan your retirement income.”

While Fidelity is unique in asset management and retirement savings, there are other ways people can get retirement savings into crypto. Companies such as Kingdom Trust, iTrust Capital and BitcoinIRA allow investors to buy digital assets through exchanges and hold them in individual retirement accounts. Additionally, in June, Coinbase partnered with ForUsAll to allow participants in an employer-sponsored program to purchase dozens of different crypto assets and hold them in a tax-deferred program.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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