An industry campaign is demanding that the U.S. Department of Labor reverse its prior recommendations regarding the inclusion of cryptocurrency in 401(k) plans.
The Crypto Council for Innovation (CCI) is backed by Coinbase and Block and is requesting that the U.S. Labor Department reverse March’s recommendations that warned customers about the risks of donating cryptocurrency to 401(k) plans. In particular, the Department is under investigation for focusing excessively on crypto’s hazards while ignoring its advantages.
In March, the U.S. Labor Department originally raised worry over the inclusion of cryptocurrency in 401(k) plans.
Acting U.S. Labor Department assistant secretary Ali Khawar warned the Wall Street Journal at the time that the Department “had major concerns about plans’ choices to expose members to direct investments in cryptocurrencies or similar products, such as NFTs, coins, and crypto-assets.”
First to draw blood in April was Fidelity Investments, which has now given retirement plans to 23,000 businesses. It also revealed that it was incorporating 401(k) accounts for “digital assets.”
The Labor Department quickly reacted negatively to Fidelity’s disclosure, expressing “grave concerns” and advising 401(k) plan providers to anticipate inquiries into how they would “square their activities with their obligations of prudence and loyalty.”
Enter the CCI, an industry association backed by Coinbase, the biggest cryptocurrency exchange in the United States, and Block, previously Square, Jack Dorsey’s payments startup.
The trade association has made it quite apparent that it wants the Department of Labor to reverse the March guidelines and provide retirement plan administrators with protection against accusations of breach of duty.
“[The Department of Labor] evaluates solely the hazards of cryptocurrencies, ignoring their potential advantages, like as growth and portfolio diversification.” As with any other form of investment opportunity, plan fiduciaries must evaluate both the risks and possible rewards of cryptocurrencies, according to Sheila Warren, CEO of the CCI, in an interview with Barron.
The CCI also asserts that the Labor Department’s remarks are incompatible with President Joe Biden’s March executive order requiring several agencies to research crypto and publish their conclusions.
Republicans are contributing as well. In May, Senator Tommy Tuberville (R-Alabama) sponsored “The Financial Freedom Act,” a measure designed to restrict the Labor Department’s ability to dictate which investments retirees may engage in.
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