NY Attorney Calls for Ban on Bitcoin in Retirement Plans

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New York Attorney General Letitia James called for a ban on cryptocurrency investments by retirement plans (IRAs) in a letter addressed to members of the US Congress.

The Attorney proposes new legislation that would bar US citizens from purchasing cryptocurrencies using your retirement plans and other pension plans, such as 401(k).

In the letter, the attorney stated that lawmakers need to protect workers’ retirement plans, especially after the recent collapse of FTX that caused billions in losses to users.

“On behalf of the people of the state of New York , I call on Congress to pass legislation to designate digital assets – for example, cryptocurrencies, digital currencies and digital tokens – as assets that cannot be purchased using funds in …”

Her too said that legislation such as the Financial Freedom Act of 2022 and the Retirement Savings Modernization Act, which would make it legal to carry out financial transactions involving digital assets, should be vetoed.

The attorney further said that, although investments in cryptocurrencies have increased in the last two years, these assets “have no intrinsic value on which their prices are based.”

“Although cryptocurrencies have become popular over the last decade , they have no intrinsic value on which their prices are based.”

Bitcoin Retirement

Fidelity Investments and ForUsAll, which administer retirement plans, have started offering bitcoin in plans 401(k) in recent months.

Plans 401(k) are designed for long-term investments and retirement savings. These plans often offer traditional and long-used investments such as mutual funds, ETFs, and target date funds.

A 401(k) is an employer-sponsored retirement savings plan that provides benefits tax significant. With a 401(k), an employee sets a percentage of their income to be automatically withdrawn from each paycheck and invested in your account.

Participants can choose how to allocate their resources among the investment options offered by the plan, which generally include several mutual funds.

Fidelity now allows retirement investors to allocate up to a maximum of % in Bitcoin. And it is precisely this option of investing in Bitcoin that the New York attorney wants to prohibit.

Prohibition of Bitcoin investments in retirement plans

As such, she claims that choosing cryptocurrencies as investment options for accounts retirement plan is too risky, citing price volatility, fraud and lack of regulation.

According to the attorney general, the greatest risk of putting cryptocurrencies in retirement funds stems from the absence of safeguards found in traditional finance.

“Perhaps [a] the most important reason why cryptocurrencies are incompatible with IRAs and defined contribution plans is that issuers often evade the safeguards designed to protect the average investor and the integrity of the system…”

De Overall, James cited four reasons why But US lawmakers should ban cryptocurrency purchases.

Firstly, he claimed it would help protect retirement savings. Next, he said that Congress is obligated to “protect the retirement savings of American workers from digital assets”.

Third, he cited the materialization of risks posed by digital assets and , finally, said that these assets have no value and there is a risk of fraud.

Think twice before to offer bitcoin in retirement plans

Meanwhile, US senators are urging Fidelity to think twice times before offering Bitcoin as an investment in retirement plans.

In a letter to Fidelity CEO Abigail Johnson, US Senators Richard Durbin, Elizabeth Warren and Tina Smith say that the recent collapse of FTX underscores his position that Bitcoin is too risky a bet for retirement investing.

“In light of the recent impressive events in the digital asset market, we write today as a continuation tion of our previous letter sent on July 2022. Once again, we urge Fidelity Investments to think twice before offering Bitcoin in the 401(k) plan.”