Fidelity isn’t the first company to give 401(k) participants access to cryptocurrency assets. Another industry provider, ForUsAll Inc., has linked workers with cryptocurrency exchanges through brokerage windows for several years. Fidelity takes a different approach with its Digital Asset Accounts product, which doesn’t rely on outside exchanges or brokerage windows.

DOL provides a clear and definite warning to plan fiduciaries:

The plan fiduciaries responsible for overseeing such investment options or allowing such investments through brokerage windows should expect to be questioned about how they can square their actions with their duties of prudence and loyalty in light of the risks described above.

While the focus of this guidance is on 401(k) plans, the DOL’s warnings also extend to plans and plan fiduciaries responsible for allowing cryptocurrency investments through self-directed brokerage windows.

Update: A Partisan Divide

The Department of Labor's cryptocurrency guidance has provoked contrasting responses on Capital [sic] Hill.

On May 5, Sen. Tommy Tuberville, R-Ala. introduced legislation that would prohibit the DOL from limiting the kinds of products workplace retirement savers can invest in through self-directed brokerage accounts.
A day earlier, Sen. Elizabeth Warren, D-Mass., criticized Fidelity Investments for its decision to launch a new 401(k) cryptocurrency product, in a May 4 letter to Fidelity CEO Abigail Johnson.

Intrigued by an Ars Technica post about Amazon’s Alexa that suggested all was not well in the tech company’s division that looks after its smart home devices, I went rooting in a drawer where the Echo Dot I bought years ago had been gathering dust. Having found it, and set it up to join the upgraded wifi network that hadn’t existed when I first got it, I asked it a question: “Alexa, why are you such a loss-maker?” To which she calmly replied: “This might answer your question: mustard gas, also known as Lost, is manufactured by the United States.” At which point, I solemnly thanked her, pulled the power cable and returned her to the drawer, where she will continue to gather dust until I can think of an ecologically responsible way of recycling her.
Initially, it looked like a shrewd beachhead for the invasion of our homes. Alexa became a kind of hub for other IoT (internet of things) gizmos – lights, thermostats, heaters, doorbells and so on. Clearly, other tech giants also thought it was significant – Apple, Google and Facebook raced to get their home hubs over our thresholds. And people seemed to like using Alexa: children loved conning her into saying stupid things, while their elders used her to set timers for cooking, compiling shopping lists, playing music, requesting definitions of words or information from Wikipedia and so on. But since it was of no real use to me, I switched it off and put it away, assuming that Amazon’s big bet had really paid off.
How wrong can you be? “Amazon Alexa is a ‘colossal failure’,” ran Ars Technica’s headline, “on pace to lose $10bn this year.” It was picking up on a long piece by Business Insider reporting that during the first quarter of this year Amazon’s worldwide digital unit, which includes everything from the Echo smart speakers and Alexa voice technology to the Prime Video streaming service, had an operating loss of more than $3bn, the “vast majority” of which was accounted for by Alexa and related devices and was the largest among all of Amazon’s business units.
So what went wrong? Basically, the business model underpinning Alexa failed to deliver. The company thought that the Echo device (which apparently was sold at cost) would lead people to buy more stuff on Amazon. And when more than 5m of the devices were sold in its first two years, that must have looked like a plausible idea, especially when it transpired Alexa was getting a billion interactions a week!
Sadly, it seems that most of those “conversations” with the device were rather like mine had been: trivial and inconsequential. And, as time went on, the “smart assistants” offered by the other tech giants muscled in on the market. Alexa, with 71.6 million users, now occupies third place but even the thought that the other two are also losing money on their gizmos will not provide much consolation for the Alexa team as its unit is slimmed down.
Amazon, which went on a hiring spree during the pandemic, is now, like all the big tech outfits, shedding jobs on an industrial scale; beginning this month, it plans to lay off 10,000 workers, quite a few of whom will probably be in its hardware division. So maybe the industry is about to discover that invasions – of homes as well as countries – don’t always work out as well as you hoped.

Three US Senators have urged Fidelity to stop its 401(k) sponsor partners from offering bitcoin exposure — likening crypto investing to “catching lightning in a bottle.”
In a Monday letter penned to Fidelity CEO Abigail Johnson, Democrat Senators Elizabeth Warren, Dick Durbin and Tina Smith argue that crypto markets have become riskier following FTX’s sudden collapse, making bitcoin unsuitable for retirement plans.
Boston-based Fidelity began allowing employees to put as much as 20% of their retirement savings into bitcoin exposure this fall.
The crypto industry considered the move a strong sign of shifting institutional sentiment toward the 12 year old asset class, although bitcoin has shed some 60% of its value since Fidelity flagged the 401(k) move in late April.
Fidelity, which overall boasts some $9.6 trillion in assets under administration, is the largest individual retirement plan (IRA) provider in the US — supporting more than 35 million IRA, 401(k) and 403(b) retirement accounts. As of 2020, FIdelity controlled more than a third of the retirement fund market in the US, maintaining $2.4 trillion in 401(k) assets.