A Labor Department official said Thursday he still has qualms about Fidelity Investments cryptocurrency product for retirement savings following talks with the company.
Ali Khawar, DOL acting assistant secretary and head of the Employee Benefits Security Administration, said he’s spoken to Fidelity officials about the Digital Assets Account the company announced last month. The product will allow retirement plan participants to allocate a portion of their assets to Bitcoin through an option on their employers 401(k) investment menu.
Fidelity announced the product a few weeks after the DOL released guidance warning retirement plan fiduciaries to use extreme care when considering crypto investment offerings.
Fidelity said last week that it’s talking with regulators and lawmakers about consumer safeguards that are included in its crypto product. But Khawar said he still has misgivings.
We didnt leave that conversation feeling comfortable that all our concerns were unfounded, unwarranted, resolved by what theyve done, Khawar told reporters on the sidelines of the Insured Retirement Institutes annual conference in Washington.
When asked whether the discussions left him feeling better, worse or about the same regarding Fidelitys crypto product, Khawar indicated his position hasnt shifted.
I definitely dont feel better, he said. I dont know if I feel worse or the same. This is an important issue to us.
He said the agencys conversations with Fidelity have been forthright. There was a fairly cordial but candid exchange of views, Khawar said. I think they understand the concerns we have. Im sure well be talking more.
A Fidelity official said that its crypto product is a responsible way to meet the demands of mainstream interest in digital assets and that the company would continue talking to regulators, policymakers and consumers.
Several layers of consumer safeguards apply to the DAA, including the inherent protections of a workplace retirement plan, the features of the account such as excessive trading oversight and institutional security, plan sponsor imposed limits on allocations to the DAA, and leading educational resources to help inform participants understand whether exposure to bitcoin is right for their risk tolerance, Dave Gray, Fidelitys head of workplace retirement offerings and platforms, said in a statement.
Retirement plan fiduciaries and the financial advisers who work with them are caught between DOLs warning about crypto and the imprimatur of Fidelity, the largest retirement plan administrator, on using it. Crypto investing is increasing in popularity, although the market has declined precipitously in recent weeks.
The DOL guidance doesn’t prohibit crypto investing in retirement accounts. It emphasizes that plan fiduciaries must evaluate it as they would any other investment.
We dont think we said something new on fiduciary obligations, Khawar said.
The agency let most of the Trump administrations rule go into force in February, while another piece regarding record keeping for rollovers will be implemented in late June. The agency includes on its regulatory calendar a pending rule proposal about the definition of fiduciary.
Observers anticipate the proposed rule will increase the number of financial professionals including insurance agents who are considered fiduciaries for retirement investing and who will have to follow the agencys conduct standards to qualify to receive commissions and other third-party payments.
Its something we continue to work on, Khawar said during an IRI session. I dont have a specific date to share.