The Secretary of the United States Treasury, Janet Yellen, weighed in on including 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 June 9, Yellen shared her opinion on the pioneer attempt to include crypto in retirement plans undertaken by Fidelity Investments:
“It’s not something that I would recommend to most people who are saving for their retirement. To me it’s very risky investment.”
The discussion around digital currencies in 401(k) plans saw the participation of the Department of Labor, and senators Elizabeth Warren, Tommy Tuberville and Cynthia Lummis.
Yellen went as far as 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 that to my mind would be a reasonable thing.”
The last statement is important in the context of a legislative uncertainty that has been following the topic of crypto as a retirement investment since the very beginning. 401(k) investments are subject to the Employee Retirement Income Security Act of 1974. It doesn’t specify which asset classes can or cannot be included in a 401(k), but obliges fiduciaries to “show the care, skill, prudence and diligence that a prudent person would exercise.”
In April, Fidelity announced that it would allow 401(k) retirement saving account holders to directly invest in Bitcoin (BTC). The United States Department of Labor (DOL) responded with a compliance report, threatening legal action, while senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota requested the firm to provide answers on how they are planning to address risks laid out by the DOL.
Meanwhile, Senator Tommy Tuberville from Alabama has unveiled a “Financial Freedom Act” to allow investors to add cryptocurrency to their 401(k) retirement savings plan and Wyoming Senator Cynthia Lummis teased the legalization of crypto in 401(k)’s as a part of her long-anticipated crypto bill.