Adding cryptocurrency to retirement plans for US citizens gets more and more conflicting perspectives. Republicans stand against strict regulations of digital assets by the Department of Labour.
Not long ago, Fidelity Investments, the largest U.S. retirement-plan administrator, announced that they would enable their investors to diversify their retirement assets with Bitcoin. It led to a heated debate about the possibility of digital assets being a part of long-term pension savings.
The Department of Labour published a Compliance Assistance Release, which gave clear warnings regarding volatile and loosely regulated assets in retirement savings to protect the interests of plan participants.
This regulatory guidance met opposition from Republicans. In particular, Sen. Tommy Tuberville introduced the Financial Freedom Act, which would allow self-directed 401(k) account investors to select investments in cryptocurrency through a brokerage window.
”It simply empowers 401(k) savers who choose to self-select their retirement portfolios by preserving the integrity of the brokerage window.” Sen. Tommy Tuberville
On June 14, The Crypto Council for Innovation, a global alliance of crypto industry leaders with Republican Senator in the team, entered into the dispute with the Department of Labour, demanding to reconsider their decision regarding digital assets restrictions for retirement plans. The Crypto Council highlights that the DOL solely considered only the risks while ignoring the potential benefits of cryptocurrencies. Moreover, they point out that such restrictions go against Biden’s Executive Order of March, which implies supporting the responsible development of digital assets.
The DOL is supported by the Democrats. Fidelity’s announcement prompted Elizabeth Warren, the U.S. Democrat Senator, to set off alarm bells regarding too “risky and speculative” asset for pension. She wrote a letter then to the Fidelity Investments’ chief executive, trying to prevent them from “a big mistake” and asking to adhere to the DOL’s guidance, which doesn’t encourage adding digital assets to retirement plans.
Fidelity is not the first company to announce offering cryptocurrency to retirement savers. ForUsAll Inc., a 401(k) provider, already allows participants to allocate up to 5% of their retirement funds into cryptocurrency which will be managed by Coinbase, a leading cryptocurrency exchange. However, ForUsAll manages assets only for 70,000 employees, whereas Fidelity offers financial products and services to more than 40 million individuals.
One way or another, none of the parties in this dispute seem to be ready to back down. For now, let’s just keep an eye on how this story unfolds.
