Fidelity Investments announced that it’s launching employer-sponsored 401(k) plans that invest in Bitcoin. Fidelity administers retirement plans for approximately 23,000 businesses and manages over $11T in assets.

Why should we care?
Fidelity has reported clients from “a wide range of industries” signing up for the alternative retirement plan, with software provider MicroStrategy as its first onboarded customer. But crypto’s severe fluctuations in price risk producing major financial losses for these clients’ employees. If current boom-bust behaviors among crypto investors are representative of larger consumer trends, then employees are likely to buy into something like a Bitcoin 401(k) when crypto prices are on the rise, and then pull out suddenly during a crash, which would exacerbate the highs and lows of their portfolios. Federal regulators and lawmakers have issued warnings about investing in cryptocurrencies through a 401(k). Fidelity says it’s engaged in a “respectful dialogue” with regulators about its plans—but, especially if early adopters see financial ruin, then we should expect crypto-based 401(k) initiatives to be a short-lived project.