Republican Senator Tommy Tuberville of Alabama unveiled a new bill he calls the Financial Freedom Act that would allow Americans to add cryptocurrencies to their retirement 401(k)s without regulatory guidance in a savings plan.
The new bill is Tuberville’s response to the Department of Labor’s (DOL) push to potentially exclude cryptocurrencies from 401(k) investment plans because of the perception that cryptocurrencies could pose risks to investors. As Cointelegraph reported, the DOL said employees who choose to invest in cryptocurrencies through their 401(k)s could raise legal concerns.
In a May 5 CNBC op-ed, Senator Tuberville said:
"The federal government has no right to interfere with the ability of American workers to invest their 401(k) plan savings as they see fit."
He said the Labor Department's March 10 policy change to self-direct employees' use of brokerage windows for income investing "is inconsistent with longstanding practice."
Brokerage windows allow 401(k) investors to control the investments their accounts invest in, rather than accepting investments chosen for them by their employer's broker. The senator continued:
“The agency’s new guidance ends this tradition of economic empowerment in favor of Big Brother-style government control. Moreover, the Labor Department’s excessive guidance aims to limit the investment options, thereby placing a significant new regulatory burden on 401(k) plan trustees."
Investment management firm Fidelity Investments said in April. On the 26th it will begin allowing clients to include Bitcoin (BTC) in their 401(k) accounts. That led Democratic senators Elizabeth Warren and Tim Smith to argue in a letter to Fidelity CEO Abigail Johnson that there may be a conflict of interest because the company has been using crypto products since 2017. They also mentioned that crypto investments carry "significant risks of fraud, theft and loss."
Senator Warren is an outspoken opponent of crypto investing, dubbing the industry "the new shadow banking" last year.
While the DOL’s new guidance doesn’t specifically mention Fidelity, it notes that abusing currency laws through cryptocurrencies could lead to the closure of trading platforms, ultimately harming investors.
Senator Tuberville promised that the Financial Freedom Act would prohibit the Labor Department from limiting the types of investments a self-directed 401(k) retirement plan can invest in. He concluded his column succinctly: "The Department of Labor should not limit the range or types of investments that retirement savers can choose from."
"Whether or not you believe in the long-term economic prospects of cryptocurrencies, the choice of investing your retirement savings should be yours, not the government's."
So far, no other senator has publicly supported the brand new bill. It needs a majority vote in the Senate to pass to the House for further scrutiny. Democrats currently hold a majority in the Senate, making passage of the bill an uphill and uphill battle. Tuberville, however, has made his point loud and clear.
Huang Bo
Bitcoinist
Cointelegraph