Republican lawmakers in the US have introduced a bill to amend the Employee Retirement Income Security Act of 1974 (ERISA) that would enable investment managers to offer Bitcoin and other cryptocurrencies in 401(k) plans.
Draft Bill To Allow Cryptocurrency (Bitcoin) In 401(K) Plans
Republican members of Congress have introduced a bill, called the Retirement Savings Modernization Act, that would permit investment managers to offer Bitcoin and other cryptocurrencies as part of their 401(k) plans. A 401(k) is a retirement savings and investing plan and most of it usually include a pre-selected group of traditional investments, such as mutual funds, or offer employees a brokerage window that lets them pick specific investments.
The bill seeks to remove the liability for a breach of fiduciary who recommend, select or monitor investment option in cryptocurrencies. The proposed bill is an amendment to the Employee Retirement Income Security Act of 1974 (ERISA). The bill adds classifications to the types of assets fiduciaries are allowed to offer and further expound the definition of a “covered investment” and lists “digital assets” as assets that can be included within a standard 401(k) savings plan.
In an effort to counter the effects of inflation and fiscal uncertainty on retirement investments, lawmakers have suggested expanding retirement investment options. They noted that 401(k) plans are more popular than traditional pensions for retirement. The bill’s sponsors include Senator Pat Toomey of the Senate Banking Committee, Senator Tim Scott, and House of Representatives member Peter Meijer. The bill is likely to be introduced after the November midterm elections.
Department Of Labor Position On Cryptocurrency Investment
The U.S. Labor Department has posted a compliance release on its website that urged those in charge of 401(k) retirement plans to exercise extreme care when considering whether to add cryptocurrencies to investment options. The labor department further cited that dealing with cryptocurrencies and other digital assets present significant risks that include fraud, theft and financial loss. Meanwhile, ForUsAll a retirement provider, sued the labor department over the anti-crypto compliance release. David Ramirez, Chief Investment Officer at ForUsAll said that the department is trying to restrict the types of investments that Americans can choose to make when they don’t have the legal authority to do so.
Fidelity Investments, one of the largest financial service providers, roll out an investment option that offer 401(k) plans in Bitcoin earlier this year. MicroStrategy, founded by Michael Saylor a top Bitcoin proponent, was the first company to sign up for the investment product.