Ben Strack

<div id="highlights-block_626ac15bfc93e" class="highlights">
 <ul>
 <li>T. Rowe Price, which services about 6,900 401(k) plans, has not seen demand for crypto investments in retirement plans, according to a spokesperson</li>
 <li>Financial institutions that don’t follow Fidelity’s lead will risk losing customers, crypto executive says</li>
 </ul>
 
</div>



While Fidelity <a href="https://cms.blockworks.co/fidelity-delves-deeper-into-crypto-by-allowing-bitcoin-in-401ks/" target="_blank" rel="noreferrer noopener">revealed Tuesday</a> that it is getting set to allow people to allocate a portion of their retirement savings to bitcoin through the company’s 401(k) platform, competitors aren’t as bullish on the prospect.



The Boston-based financial services company reported growing interest from employers to offer crypto access to employees. But competing 401(k) providers cite a lack of demand and crypto’s speculative nature as reasons for holding off.



Fidelity’s <a href="https://www.fidelityworkplace.com/s/digitalassets" target="_blank" rel="noreferrer noopener">Digital Assets Account</a> offering is expected to be available to the roughly 23,000 employers using the company&#8217;s platform by mid-year. It will allow employees to gain exposure to bitcoin, with a maximum allocation of 20%.



<h3 class="wp-block-heading">Competitors weigh in</h3>



Vanguard has no plans to offer a cryptocurrency option within 401(k) plans, a spokesperson told Blockworks.



The company, which has about 1,400 401(k) plan sponsors, did not comment on whether it could seek to follow Fidelity’s move. Instead, the representative referenced <a href="https://investor.vanguard.com/investor-resources-education/article/cryptocurrencies-and-vanguard-what-we-think">a blog post</a> the company published in September, which calls cryptocurrencies “highly speculative” and notes that their long-term investment case is “weak.”&nbsp;



“As many of our investors know, our investing philosophy encourages staying the course and tuning out the noise,” the blog states. “As cryptocurrencies and blockchain become increasingly mainstream, we’ll continue to monitor their development and discern the best path forward for our investors.”&nbsp;



No companies using Charles Schwab’s 401(k) platform offer crypto investments, said a spokesperson, who declined to comment about whether the firm would consider launching a similar offering to Fidelity. 



Schwab currently serves roughly 1,000 401(k) plans. About 60 percent of its Schwab Retirement Plan Services clients offer a “brokerage window” in their 401(k) plan, which allows individuals to gain access to stocks, mutual funds, ETFs and over-the-counter trust products.&nbsp;



While some of these investment options offer exposure to crypto, assets into such products amounted to less than 1% of total 401(k) brokerage window assets at Schwab, as of Dec. 31, 2021, the representative told Blockworks.



T. Rowe Price, which services about 6,900 401(k) plans, has previously noted “the high level of speculation and lack of regulatory clarity” in the space. The mandates the firm manages for clients today are not well suited for investing directly in digital assets, a spokesperson said.



“None of the defined contribution plans we recordkeep offer cryptocurrency, and we have not seen client demand for that type of investment,” the representative added.



<h3 class="wp-block-heading">Only a matter of time?</h3>



But Bobby Zagotta, CEO of Bitstamp USA, said Fidelity wouldn’t make this move if there wasn’t high demand for crypto.&nbsp;



Bitstamp’s <a href="https://cms.blockworks.co/80-of-institutions-bullish-on-cryptos-future-survey-finds/" target="_blank" rel="noreferrer noopener">latest Crypto Pulse survey</a> found that 80% of institutional investors believe that crypto will overtake traditional investment vehicles within a decade.



“Other financial institutions will have to follow Fidelity’s lead or risk losing customers who increasingly see digital assets as an important part of their retirement planning,” Zagotta told Blockworks.&nbsp;



Nina Tannenbaum, head of business operations at Algorand, said that Fidelity’s move is a key indicator that digital currencies are increasingly being viewed as more than just short-term speculative assets.&nbsp;



“It is also encouraging to see that Fidelity plans on building out their digital asset offerings beyond bitcoin,” Tannenbaum said. “They could consider expanding their offerings to include digital assets that are far more ESG and sustainable-friendly.”



Though Fidelity is the first major financial services company to provide crypto exposure within 401(k)s, ForUsAll <a href="https://cms.blockworks.co/retirement-investment-provider-introduces-alt-401k/" target="_blank" rel="noreferrer noopener">unveiled an offering last year</a>, allowing employers to provide alternative investment options within such plans.



<a href="https://go.forusall.com/growing-businesses-best-401k/?utm_source=adwords&amp;utm_medium=ppc&amp;utm_term=forusall&amp;utm_campaign=Brand_Prospecting_Exact_Core&amp;hsa_cam=10630087387&amp;hsa_mt=e&amp;hsa_ver=3&amp;hsa_src=g&amp;hsa_ad=589076717886&amp;hsa_net=adwords&amp;hsa_tgt=kwd-312639716760&amp;hsa_acc=3390420381&amp;hsa_grp=103738900303&amp;hsa_kw=forusall&amp;gclid=CjwKCAjw9qiTBhBbEiwAp-GE0QA-WwlxltqteXpuGlVbjdHnhG8RJVUiwtZyO8vuRF3dJ5Oxl4rtuhoCWVsQAvD_BwE" target="_blank" rel="noreferrer noopener">ForUsAll</a> CEO Jeff Schulte said crypto access in 401(k)s is “inevitable,” noting that he expects other large institutions to follow Fidelity.&nbsp;



“Not all financial institutions and banks will jump in right away; it will take time,” he said. “But we believe that those who truly listen to their clients&#8217; needs and understand the real investment case for crypto in a well-diversified portfolio — they will be the innovators and among the first to follow Fidelity&#8217;s lead.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



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Will Competitors Follow Fidelity’s Lead in 401(k) Bitcoin Offering?

<div id="highlights-block_621fe7d1b1390" class="highlights">
 <ul>
 <li>The filing by Charles Schwab’s asset management arm follows similar proposals by competitors BlackRock and Fidelity Investments</li>
 <li>Charles Schwab CEO Walt Bettinger called cryptocurrencies “hard to ignore” in January</li>
 </ul>
 
</div>



Charles Schwab’s asset management arm is looking to join the crypto ETF fray, following industry heavyweights like BlackRock and Fidelity Investments.



The fund group filed to launch an index-tracking ETF offering exposure to companies involved with digital assets, as well as business activities connected to blockchain technology, according to <a href="https://www.sec.gov/Archives/edgar/data/1454889/000110465922029220/tm226059d1_485apos.htm" target="_blank" rel="noreferrer noopener">a Wednesday regulatory disclosure</a>.



The proposed Schwab Crypto Economy ETF plans to invest at least 80% of net assets in stocks included in the Schwab Crypto Economy Index. The filing did not list a ticker or expense ratio.



The fund would not invest in digital assets directly.



A spokesperson for the company did not immediately return a request for comment.



Charles Schwab CEO Walt Bettinger told Bloomberg in January <a href="https://cms.blockworks.co/ceo-of-financial-services-giant-charles-schwab-calls-cryptocurrencies-hard-to-ignore/" target="_blank" rel="noreferrer noopener">cryptocurrencies are “hard to ignore”</a> and “fairly significant.”



A Schwab spokesperson <a href="https://cms.blockworks.co/blockchain-etfs-gaining-steam/" target="_blank" rel="noreferrer noopener">told Blockworks that month</a> the company offers third-party mutual funds and ETFs with crypto ties through its brokerage platform and was “evaluating how and when we could offer our clients additional opportunities for exposure to cryptocurrencies.”



The Schwab filing follows BlackRock’s, the world’s largest asset manager, <a href="https://cms.blockworks.co/blackrock-files-for-crypto-etf/" target="_blank" rel="noreferrer noopener">filing to launch</a> an ETF focused on blockchain technology in January. Fidelity Investments <a href="https://cms.blockworks.co/fidelity-plots-crypto-etfs/" target="_blank" rel="noreferrer noopener">revealed plans a week later</a> to bring to market ETFs that would invest in companies involved in the metaverse and crypto more broadly.



The bank’s asset management arm oversaw roughly $380 billion of assets within index mutual funds and ETFs, as of Sept. 30, the most recent data available.



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Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



Get alpha directly in your inbox with the <a href="https://blockworks.co/newsletter/research">0xResearch newsletter</a> — market highlights, charts, degen trade ideas, governance updates, and more.



The Lightspeed newsletter is all things Solana, in your inbox, every day. <a href="https://blockworks.co/newsletter/lightspeed">Subscribe to daily Solana news</a> from Jack Kubinec and Jeff Albus.