The Department of Labor earlier this year published guidance on employee retirement programs that offer cryptocurrency investments. Fidelity Investments’ take: Not helpful.

Why it matters: Fidelity’s intention to offer a retirement plan with bitcoin later this year is testing the government’s understanding of the crypto market and how it relates to its conservative stance on Americans’ retirement savings accounts.

• More people seem to want to invest a little in bitcoin and other cryptocurrencies, but the Employee Retirement Income Security Act of 1974 (ERISA) requires plan administrators behave in a loyal way to retirees and offer them prudent investments.

Details: “While styled as compliance assistance, the CAR [compliance assistance release] does not provide any constructive guidance on how plan fiduciaries can address the issues identified by the Department and fulfill their fiduciary duties in assessing cryptocurrencies,” wrote Fidelity Investments’ Dave Gray in an April 12 letter to Labor. Gray heads the company’s workplace retirement offerings.

• Among Fidelity’s objections with the guidance, it noted it “conflates a wide range of potentially very different investments.”
• In other words, Fidelity thinks each coin or token is different.

Two weeks after Gray’s letter, Fidelity announced it would release a retirement plan with bitcoin in it despite the strong language in the guidance.

• The guidance does not forbid such plans. It just raises issues.

Catch up quick: Fidelity’s plan would offer a retirement plan option for its clients to allow their employees to invest part of their savings in bitcoin.

• Labor is already expressing “grave concerns” about the product, according to the Wall Street Journal.

The other side: Labor’s March compliance assistance release was aimed at employee retirement programs that want to include cryptocurrencies, saying it “has serious concerns about the prudence” of plans that expose workers to cryptocurrencies.

• It noted concerns about market volatility, unsophisticated investors, valuation and other issues.
• It went on to say that employers who try to offer such plans “should expect to be questioned.”

Of note: Fidelity announced that business intelligence firm Microstrategy (also the largest holder of bitcoin of any publicly traded company) intends to be the first to offer the plan.

The latest: While Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, has expressed serious doubts about Fidelity’s offering, he also told the WSJ that the guidance could be rescinded or amended if the market develops.

Quick take: Fidelity is explicit that employees can’t invest more than 20% of their savings in bitcoin, which sounds like a very specific number they’ve put out to negotiate with Labor.