Page 29 - Investment Advisor December 2022/January 2023

Three U.S. senators sent a letter to Fidelity Investments CEO first plan sponsor clients this fall,” the company said.
Abigail Johnson in July to challenge the mutual fund giant’s “We are continuing our respectful dialogue with policymak-
“immensely troubling” plan to let investors add Bitcoin to ers to responsibly provide access with all appropriate consum-
their 401(k) accounts. “When saving for retirement is already er protections and educational guidance for plan sponsors as
a challenge for so many Americans, why would Fidelity allow they consider offering this innovative service. Consistent with
those who can save to be exposed to our ongoing dialogue with regulators and policymakers, we are
an untested, highly volatile asset like working with them directly.”
Bitcoin?” Sens. Richard Durbin, Durbin’s tweet with the letter drew scorn from some
D-Ill., Elizabeth Warren, D-Mass., Twitter users, including at least two who said the senators
and Tina Smith, D-Minn., wrote, are on the wrong side of history. “Sir, with all due respect,
noting that the cryptocurrency is the government promotes lottery tickets,” tweeted Bitcoin
unregulated and was trading way is Saving. “Senator, you have not done the work,” added
off its peak. PolybiusBitcoin. Kris Adams added: “OMG, you guys still
“While the underlying tech- don’t get it, do you?”
nology of blockchain shows prom-
ise and has the potential to be used
for innovative and exciting applications,
consumers must be wary of the risks associated with Bitcoin
and other digital assets. What appears to be certain is many
are unaware of the potential risks and financial dangers
posed by digital assets like Bitcoin,” they said in the letter
dated July 26.
Durbin tweeted the message on July 28, saying he and his
colleagues were sounding the alarm. We should all agree, he
tweeted, that “workplace retirement accounts are no place
to gamble.”
The senators, noting that the company cites the risks on its
own website and plans to cap 401(k) Bitcoin holdings at 20%,
called it troubling that “Fidelity is well aware of the dangers
associated with investing in Bitcoin and digital assets, yet is
deciding to move ahead anyway.”
“There are many ways that Americans can invest in Bitcoin The stock market’s current “superbubble” has yet to burst,
and the cryptocurrency casino, but it seems as though this renowned investment strategist and forecaster Jeremy
latest effort, through what is supposed to be a retirement nest Grantham suggested in an Aug. 31 opinion piece, warning
egg, is a bridge too far,” they wrote, adding that ”retirement investors that a financial “tragedy” may be in the offing.
accounts must be held to a higher standard” that unregulated Grantham, co-founder of the asset manager GMO, made
digital assets fail to meet. the comments on his firm’s website on Aug. 31 as U.S. equities
“This asset class is unwieldy, immensely complex, unreg- experienced the fourth straight day in a major sell-off.
ulated and highly volatile. Working families’ retirement “The current superbubble features an unprecedentedly
accounts are no place to experiment with unregulated asset dangerous mix of cross-asset overvaluation (with bonds, hous-
classes that have yet to demonstrate their value over time,” the ing and stocks all critically overpriced and now rapidly losing
senators said. momentum), commodity shock, and Fed hawkishness,” he
Warren and Smith sounded the same alarm in May when wrote. “Each cycle is different and unique — but every histori-
they wrote a similar letter to Johnson. The U.S. Department of cal parallel suggests that the worst is yet to come.”
Grantham, known for accurately calling past market bub-
Labor, among others, has raised concerns as well. bles, cited parallels between current market conditions
Warren: Al Drago/Bloomberg assets and the blockchain. We are proud of the Digital and 2000, saying the current one appears to have paused
Fidelity released a statement responding to the Durbin,
and those of the three previous superbubbles in 1929, 1972
Warren and Smith letter.
“Fidelity continues to have strong interest in digital
between its third and final acts. “Prepare for an epic finale,”
he cautioned investors.
Assets Account as a responsible solution to meet the
demands of mainstream interest. In fact, client interest has
Superbubbles, unlike other market phenomena, are among
the most important events in an investor’s career and have
not only been strong, but also spans across a wide range of
industries and company sizes. We are on track to launch our
clear features in common, Grantham wrote.
DECEMBER 2022/JANUARY 2023 INVESTMENT ADVISOR 27