NY Attorney General Urges Congress to Ban Crypto in Retirement Accounts
New York Attorney General Letitia James has urged Congress to pass a law prohibiting crypto investments in retirement accounts. “Hardworking Americans should not have to worry about their retirement savings being wiped out due to risky bets on unstable assets like cryptocurrencies,” she stressed.
NYAG Letitia James Urges Congress to Prohibit Crypto Investments in Retirement Accounts
New York Attorney General Letitia James announced Tuesday that she has “urged congressional leaders to adopt legislation that would prohibit investing retirement funds in digital assets, such as cryptocurrencies, digital coins, and digital tokens.”
In the letter she sent to Sen. Ron Wyden (D-OR), Sen. Mike Crapo (R-ID), Rep. Richard Neal (D-MA), and Rep. Kevin Brady (R-TX) Tuesday, James wrote:
On behalf of the people of the state of New York, I urge Congress to pass legislation to designate digital assets — e.g., cryptocurrencies, digital coins, and digital tokens — as assets that cannot be purchased using funds in Individual Retirement Accounts (IRAs) and defined contribution plans, such as 401(k) and 457 plans.
James provided a few reasons why cryptocurrencies are too risky to be allowed in retirement plans. In addition to having no intrinsic value, she said they are extremely volatile and “often an instrument for fraud and crime.”
The attorney general also referenced the terra crash and FTX meltdown, both of which were followed by crypto market sell-offs. Crypto exchange FTX filed for bankruptcy on Nov. 11 amid investigations that it mishandled customer funds.
Citing “recent crypto market crashes and other market turbulence,” Attorney General James said:
Investing Americans’ hard-earned retirement funds in crashing cryptocurrencies could wipe away a lifetime’s worth of hard work.
“Over and over again, we have seen the dangers and pitfalls of cryptocurrencies and the wild swings in these funds. Hardworking Americans should not have to worry about their retirement savings being wiped out due to risky bets on unstable assets like cryptocurrencies,” the attorney general stressed.
James also wants lawmakers to reject two bills that would allow crypto investments in retirement accounts. She wrote:
I urge Congress to reject the recently proposed Retirement Savings Modernization Act … and the Financial Freedom Act of 2022.
The Retirement Savings Modernization Act would “expressly allow 401(k) plan fiduciaries to make digital assets an investment option,” James explained.
The Financial Freedom Act of 2022 would “prohibit the Secretary of Labor from constraining or prohibiting the range of investments offered through a self-directed brokerage window, i.e., the Secretary of Labor would not be able to prohibit investments in digital assets,” the NY attorney general emphasized.
Fidelity Investments, the largest 401(k) administrator by assets, began offering bitcoin investments in retirement accounts this fall. This has troubled the U.S. Department of Labor. Treasury Secretary Janet Yellen has also warned that crypto is “very risky,” noting that it is unsuitable for most retirement savers. This week, three U.S. senators sent a letter to Fidelity CEO Abigail Johnson, urging her firm to stop offering bitcoin as an option for retirement accounts.
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