New York Attorney General Letitia James has urged Congress to pass legislation banning crypto investments in retirement accounts. “Hard-working Americans shouldn’t have to worry about their retirement savings being wiped out by risky bets on volatile assets like cryptocurrencies,” she said.
NYAG Letitia James Urges Congress to Ban Crypto Investments in Retirement Accounts
New York Attorney General Letitia James announced on Tuesday that she had “urged congressional leaders to pass legislation that would prohibit investing pension funds in digital assets, such as cryptocurrencies, coins digital and digital tokens”.
In the letter she sent Tuesday to Sen. Ron Wyden (D-OR), Sen. Mike Crapo (R-ID), Rep. Richard Neal (D-MA) and Rep. Kevin Brady (R-TX), James wrote :
On behalf of the people of New York State, I urge Congress to pass legislation to designate digital assets – for example, 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 pension plans. As well as having no intrinsic value, she said they are extremely volatile and “often an instrument of fraud and crime”.
The Attorney General also referenced the crash of Terra and the collapse of FTX, both of which were followed by selloffs in the crypto market. FTX crypto exchange filed for bankruptcy November 11 in the middle surveys that he mismanaged client funds.
Citing “the recent crypto market crashes and other market turmoil,” Attorney General James said:
Investing America’s hard-earned retirement funds in booming cryptocurrencies could wipe out a lifetime’s hard work.
“Time and time again, we have seen the dangers and pitfalls of cryptocurrencies and the wild fluctuations of these funds. Hard-working 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 pointed out.
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 trustees to make digital assets an investment option,” James explained.
The Financial Freedom Act of 2022 “would prohibit the Secretary of Labor from restricting or prohibiting the range of investments offered through a self-directed brokerage window, that is, the Secretary of Labor could not prohibit investments in the assets digital,” said the New York Attorney General.
Fidelity Investments, the largest 401(k) administrator by assets, began offering bitcoin investments in retirement accounts this fall. This has trouble the US Department of Labor. Treasury Secretary Janet Yellen also warned that crypto is “very risky”, noting that it is not suitable for most retirement savers. This week, three US senators sent a letter to Fidelity CEO Abigail Johnson urging her company to stop offering bitcoin as an option for retirement accounts.
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