Republican Initiative Would Counter Labor Department Crypto 401(k) Caution
Sen. Tommy Tuberville, who introduced the Financial Freedom Act last May in response to Labor Department guidance, has re-upped his proposed bill
Alabama Senator Tommy Tuberville | tuberville.senate.gov modified by Blockworks
Republican Sen. Tommy Tuberville has re-introduced legislation that would prohibit the Department of Labor from limiting the type of investments that self-directed 401(k) account investors can choose, including crypto.
“Every American should have the right to invest their retirement money how they see fit,” Tuberville, a senator from Alabama, told CNBC Wednesday.
Anthony Scaramucci, founder of investment firm SkyBridge Capital, took to Twitter to show his support for Tuberville’s proposal.
“Have to make this about the future and elect politicians that want to keep the US the mantle of financial services leadership,” Scaramucci tweeted.
The Department of Labor (DOL) said in March 2022 guidelines that the Employee Benefits Security Administration (EBSA) expects to investigate 401(k) plans that offer participant investments in cryptocurrencies and related products.
Tuberville, in response, introduced the Financial Freedom Act last May, calling the guidance at the time “government overreach at its finest.”
“We’ve got very good support; it just never made it to the floor last year,” Tuberville told CNBC Wednesday. “I think this year we’ve got a good chance…but at the end of the day it’s the right thing.”
Rep. Byron Donalds, R-Fla., plans to make the proposal in the House on Friday, Politico first reported.
Donalds said the Labor Department’s previous guidance is an “unprecedented maneuver” that infringes on economic liberty and free markets.
“To stand up against this gross example of government overreach, I am proud to support Senator Tuberville’s effort in the Senate to protect American investors from unelected Washington bureaucrats,” he told Blockworks in an email.
The DOL’s March 2022 guidelines “chilled interest” by plan sponsors and fiduciaries in direct crypto investments for the time being, Castle Funds Director Dan Hoover told Blockworks earlier this month.
Still, Fidelity said last April that the financial services company would give employers the option to offer bitcoin exposure to employees in their core 401(k) investment lineup. A spokesperson has told Blockworks the company views its Digital Assets Account offering as “a responsible solution to meet the demands of mainstream interest.”
Senators, including Elizabeth Warren, D-Mass., have repeatedly urged Fidelity — as recently as November — to stop its 401(k) sponsor partners from offering bitcoin exposure.
Sen. Tina Smith, D-Minn., said during a meeting of the Senate Housing and Urban Affairs Committee Tuesday that she believes people should be “pretty much free” to invest their money how they want to, including in crypto.
“But I am really concerned about the potential for these highly volatile assets, and risky assets, to get into our financial system and what impact that might have…for future crypto collapses,” she added.
Fidelity has said it engages in “ongoing dialogue with regulators and policymakers” to ensure consumer protections and educational guidance for plan sponsors.
A Fidelity representative declined to comment on Tuberville’s proposed legislation. The re-introduced law also comes about a week after the SEC and the Financial Industry Regulatory Authority (FINRA) again cautioned investors allocating to alternative assets in self-directed individual retirement accounts (IRAs), highlighting crypto as a risk.
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