Fidelity launches Bitcoin 401(k)s. Fintech start-ups are also in the market.
Fidelity Investments made waves in the retirement planning industry when it became the first major registrar to deploy Bitcoin for 401(k) plans. But fintech start-ups are also setting up shop.
In April, Fidelity said some of the 401(k) plans it administers would soon offer employees a way to invest in Bitcoin through dedicated “digital asset accounts.” The plan administrator, who oversaw $2.7 trillion in 401(k) assets spread across 20.4 million investors as of Dec. 31, is waiting to see which employers will sign up for the Bitcoin option, according to a person familiar with the situation.
Employers considering adding Bitcoin to their 401(k) plans must do their due diligence and obtain the necessary approvals before they can offer it, the person said. This process can take several months, while Fidelity would need about 90 days to implement, the person said.
MicroStrategy (ticker: MSTR), a software company, was the first company to sign up. But more are expected. Fidelity said Thursday it saw strong interest from employers. “In fact, customer interest has not only been strong, but also spans a wide range of industries and company sizes,” he said in a statement.
Fidelity said the first employers to offer a Bitcoin option in their 401(k) would make it available in autumn.
The investment management firm, meanwhile, was pushed back by Congress and the Labor Department, which reiterated warnings about the dangers of cryptography in 401(k)s. Fidelity said it was continuing a “respectful dialogue” with regulators and policymakers.
While Fidelity was the first major plan administrator to offer a Bitcoin option for 401(k)s, several fintechs have offered crypto access to consumers, or plan to do so, primarily through individual retirement accounts.
Consider Bitcoin IRAwhich allows users to invest in 65 cryptocurrencies including Ethereum, Solana and
Launched in 2016, Bitcoin IRA allows customers to renew their 401(k) or IRA and start buying crypto, said COO Chris Kline. Barrons. Bitcoin IRA has 150,000 users and $2 billion in assets under custody, he said.
The start-up is mostly self-funded and has no plans to seek outside capital, he said. “We don’t have anything on the roadmap at the moment,” Kline said.
There’s also ForUsAll, a 401(k) provider that works with
(COIN) to provide a platform that would enable workers to invest in cryptocurrencies. Founded in 2012, ForUsAll plans to launch the Alt 401(k) product later this summer, according to a spokesperson. “We have over 150 customers on the crypto waitlist,” he said. The startup has raised over $43 million in funding.
Bitcoin Swan is launching an IRA that lets consumers use their retirement accounts to buy Bitcoin, according to CEO Cory Klippsten. Clients can start a new IRA, traditional or Roth, or they can transfer an existing IRA to Swan, he said.
Swan has around 100 IRA customers and plans to aggressively market the product when it launches in the third quarter, he said. “We’ve had so much demand for this for so long,” Klippsten said. Swan, founded in 2019, is known for its app that lets its 65,000 users buy Bitcoin. The startup raised $8.5 million in funding, including a $6 million A round in November, according to a statement. It plans to raise a Series B round in the fall with a target of $30 million, Klippsten said.
Main Trust provides the infrastructure that helps financial services companies offer crypto. This includes the Application programming interfaces, or API, which companies like Swan, which is a Prime customer, use to open accounts for their customers. In June, the start-up raised $100 million in a Series B round, bringing total funding to $170 million, according to CEO Tom Pageler.
He expects widespread adoption of bitcoin in retirement vehicles, primarily because customers demand it. “With the overall market down, a lot of people want to diversify their holdings. Baby boomers will want to use [Bitcoin] retire,” he said. Barrons.
Write to Luisa Beltran at [email protected]