Janet Yellen Wants To Restrict 401(k) Plans From Adding Crypto• June 12, 2022 7:11 pm • Comments
U.S. Treasury Secretary Janet Yellen just publicly shared that she thinks Congress should restrict 401(k) plans from having the ability to include crypto assets.
This topic of whether or not retirement savings plans should do this has been highly debated ever since Fidelity announced that it would allow Bitcoin in its plans.
As a result of that decision, the Labor Department started to warn all other 401(k) plan administrators about doing this and cited that they had “grave concerns” for what Fidelity just did.
Despite that, the crypto community responded back in full force that whether or not it is considered risky should be left for the investors to decide as it is ultimately their savings.
Did they really sink bc of covid fears or bc it seems the Feds done spoked Robinhood and others and its clear they want to discourage #retailinvesting? Cool- we'll just pull our #401K and convert to crypto. How bout dat @SecYellen ? https://t.co/xSe0HtGJcz
— Bo P (@BOPGA08) March 23, 2021
Fidelity’s announcement followed a guidance issued by the Labor Department (DOL) warning 401(k) plan administrators about allowing cryptocurrencies in retirement plans.
Fidelity is one of the biggest 401(k) plan administrators.
Ali Khawar, Acting Assistant Secretary of the DOL’s Employee Benefits Security Administration, said the Labor Department has “grave concerns with what Fidelity has done.”
He stressed, “cryptocurrencies can present serious risks to retirement savings.”
Treasury Secretary Yellen also noted Thursday that Congress could regulate what assets could be included in retirement plans like 401(k). Commenting on whether Congress should take action, Yellen clarified:
I’m not saying I recommend it, but that to my mind would be a reasonable thing.
With Yellen continuing to stress this topic, it is possible that this could be discussed among the members of Congress as the industry is now going through a phase of increased regulation and scrutiny.
Luckily, not all law makers agree with the Labor Department’s view that Americans should be restricted in what they decide to put into their retirement accounts.
US Senator Tommy Tuberville had recently introduced a new bill called the Financial Freedom Act that specifically aims to prevent the Department of Labor from regulating the type of investments that people can use for 401(k) plans.
Going forward, this option could be essential when it comes to introducing new capital to the crypto markets and establishing it as a truly mainstream asset class.
— Markets Today (@marketsday) June 12, 2022
The U.S. Department of Labor also had raised concerns about Fidelity’s plan in the past, saying that digital assets need to mature before they can be safely allocated toward people’s retirements.
Fidelity first unveiled its plan to allow customers to choose Bitcoin for 401(k)s in April, though only a maximum of 20% of an individual’s portfolio can be in BTC.
According to Fidelity, the decision was driven by consumer demand.
As previously stated by David Gray, head of Fidelity’s workplace retirement offerings and platforms,
“We started to hear a growing interest from plan sponsors, organically, as to how could Bitcoin or how could digital assets be offered in a retirement plan.”
The Department of Labor has already been sued when it comes to its guidance on crypto so hopefully it will not affect Fidelity’s recent decision.
— EXMO.com (@Exmo_Com) June 11, 2022
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