The Secretary of the Treasury of the United States, Janet Yellen spoke out on the inclusion of cryptocurrencies in retirement plans, calling them a very risky investment that should be regulated by Congress.
During an event organized by the New York Times in Washington on Thursday, Yellen shared her opinion on the pioneering attempt to include cryptocurrencies in retirement plans undertaken by Fidelity Investments:
“It’s not something I would recommend to most people who are saving for retirement. It’s a very risky investment for me.”
The debate surrounding digital currencies in 401(k) plans featured the Department of Labor and Senators Elizabeth Warren, Tommy Tuberville, and Cynthia Lummis.
Yellen went on to say that Congress could regulate the type of assets that can be included in retirement programs:
“I’m not saying I recommend it, but in my opinion it would be reasonable.”
The latter statement is important in the context of a legislative uncertainty that has followed the topic of cryptocurrencies as a retirement investment from the beginning. 401(k) investments are subject to the Employee Retirement Income Security Act of 1974. It does not specify which asset classes may or may not be included in a 401(k), but it does require fiduciaries to “display the care, skill, prudence, and diligence that a prudent person would exercise.”
In April, Fidelity announced that it would allow 401(k) retirement savings account holders to invest directly in bitcoin (BTC). The US Department of Labor (DOL) responded with a compliance report, threatening legal action. For their part, Senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota asked the company to provide answers on how they plan to deal with the risks exposed by the DOL.
Meanwhile, Senator Alabama’s Tommy Tuberville has introduced a “Financial Freedom Act” to allow investors to add crypto to their 401(k) retirement savings plan, and Wyoming Sen. Cynthia Lummis hinted at legalizing crypto in 401 (k) as part of his long-awaited cryptocurrency bill.
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Investments in crypto assets are not regulated. They may not be suitable for retail investors and the full amount invested may be lost. The services or products offered are not aimed at or accessible to investors in Spain.