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

article-image

Alabama Senator Tommy Tuberville | tuberville.senate.gov modified by Blockworks

share

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. 

Loading Tweet..

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.


Don’t miss the next big story – join our free daily newsletter.

Follow Sam Bankman-Fried’s trial with the latest news from the courtroom

Tags

Upcoming Events

MON - WED, MARCH 18 - 20, 2024

Blockworks’ Digital Asset Summit (DAS) will take place March 18-20, 2024 at The Hilton London Metropole. Why London? Momentum.  London has become one of the world’s hottest crypto hubs.  Innovation is thriving, new institutional investors are flocking in, and regulators like […]

recent research

l1 cover.png

Research

This analysis focuses on financial metrics for general-purpose L1 blockchains. In many ways, L1s should be viewed as an entirely new asset class more comparable to digital economies than traditional businesses. L1s are the core infrastructure enabling the creation of new-age businesses like onchain protocols.

article-image

The firm has proposed seven crypto ETFs in the US with partner 21Shares, but “we don’t think that’s where this will end,” according to the Ark Invest exec

article-image

“You shouldn’t have to even know or care what your Ethereum address is any more than you do what your IP address is”

article-image

More than 100 Arbitrum ecosystem projects have already applied for grant funding

article-image

Ripple previously announced its intent to acquire Fortress on Sept. 8

article-image

Four patent applications were published since Sept. 21, suggesting that PayPal is taking a close look at distributed ledger tech

article-image

If the market wasn’t quite so boring, perhaps BitBoy’s flameout would have been a little less fiery