Bitcoin in 401(k) becomes reality for more workers

Retirement giant Fidelity says it has launched a way for US workers to put some of their 401(k) directly in Bitcoin.

As cryptocurrencies and blockchain projects like DAODAO and Nature Vault gain traction in the mainstream, more US workers may soon be allowed to invest some of their 401(k) retirement funds in Bitcoin.

Fidelity Investments announced on Tuesday that employees will be able to invest up to 20% of their 401(k) savings and contributions directly in Bitcoin, all from the account's primary menu of investment options. Fidelity claims to be the first in the market to accept such investments without going through a separate brokerage window, and it has already signed up one company who will implement the service later this year.

Given the widespread worries about the riskiness of cryptocurrencies, Fidelity's offering may be one of only a few for a long. The US authorities urged the retirement industry last month to take "great caution" when undertaking something like this, citing fears that inexperienced investors may not understand how volatile cryptocurrency can be, among other things.

In the previous year, Bitcoin saw five days in which it fell by at least 10%. Meanwhile, the S&P 500 has only experienced two such declines in the last 50 years. Aside from its volatility, there's still a lot of debate about how much a Bitcoin is worth, whether it's even worth anything at all.

Some investors may believe in all of Bitcoin's benefits, but they still prefer not to have to create a new account to buy it, learn how to store it, or deal with taxes on gains achieved in the years leading up to retirement. Or, as Dave Gray, Fidelity Investments' head of workplace retirement solutions and platforms, put it, they might come around to that belief soon, and Fidelity wanted to be prepared.

Cryptocurrencies, according to proponents, can improve returns in a well-diversified portfolio while reducing risk. That's because cryptocurrencies haven't always moved in lockstep with equities and other investments, despite the fact that they have done so in recent months on concerns about increasing interest rates.