According to a piece released by Alabama Senator Tommy Tuberville earlier today, the Republican politician supports allowing Americans to use cryptocurrency in their retirement funds. He has also presented the Financial Freedom Act, which would ban the US Department of Labor from restricting retirement plan investment options.
The US Department of Labor issued regulatory recommendations on March 10 in an attempt to prohibit cryptocurrency investments in 401(k) accounts, singling out this specific investment type. Tuberville believes that the Labor Department’s guidelines threaten to examine plans that allow participants to choose cryptocurrency investments, including brokerage windows, a mechanism that allows 401(k) plan participants to self-select their investments. He further added,
“The federal government has no business interfering with the ability of American workers to invest their 401(k) plan savings as they see fit.”
It stands true that this policy shift contradicts long-standing practices. Employers have long been allowed by the Labor Department to provide brokerage windows to employees who choose to manage the money they worked so hard to earn. The new advice from the agency puts a stop to the agency’s long heritage of economic empowerment in favor of big-brother government control.
Furthermore, the Labor Department’s overreaching guideline aims to impose a significant additional regulatory burden on 401(k) plan fiduciaries by requiring them to review the suitability of assets offered through a brokerage window and to limit investment possibilities. If a company or financial firm permits their 401(k) investors to invest in Bitcoin, they will now be subject to harsh punitive measures.
Will this new policy backfire on Fidelity’s cryptocurrency plan?
Fidelity Investments has announced that employers will be able to add Bitcoin to their 401(k) plans. Workers will be able to invest up to 20% of their assets in Bitcoin, potentially boosting Bitcoin adoption.
The initiative drew the attention of the Labor Department. Fidelity’s offering has caused the federal agency “great concern.” It issued recommendations advising businesses to avoid exposing employees to cryptocurrencies, citing investor protection as one of the major concerns.
Fidelity has criticized the guidance, calling it “constructive.” The Labor Department, on the other hand, has no intention of changing its stance. It should be emphasized, however, that the guidance does not ban Fidelity from offering Bitcoin retirement plans.