US Labor Department Witnesses Condemnation Over 401(k) Bitcoin Plans

Along with the support from Coinbase and Block, The Crypto Council For Innovation (CCI) is criticizing the US Labor Department due to its previous guidance in March. It warned consumers about the dangers associated with crypto allocation to 401(k) plans. 

The Department is facing more scrutiny because of its narrow focus on digital assets’ risks while neglecting the benefits. 

401(k) Bitcoin Plans Attracting Mixed Reactions 

What happened was, in the month of March, the US Labor Department raised concerns about including digital assets in 401(k) plans. 

The acting assistant secretary of the US Labor Department, Ali Khawar, highlighted to the Wall Street Journal that the Department has severe concerns related to the plans’ decisions to expose the folks to direct investments in crypto or related products like NFTs coins and crypto-assets.  

Fidelity Investments earlier announced that it was creating digital assets accounts in its 401(k) plans, And the announcement was instantly criticized by the Labor Department, which expressed grave concerns with Fidelity’s acts. It also advised entities offering 401(k) plans to anticipate investigations on how they will square their actions along with their duties of loyalty and prudence. 

Now, the CCI has specifically signified that it wants the Labor Department to repeal the guidance that it issued in March and grant the retirement plan managers protection against claims of duty breach. 

According to the CEO of CCI, Sheila Warren, the Department narrowly considers just the risks of crypto while it disregards the potential benefits, comprising growth and portfolio diversification. 

As with any other investment option type, plan fiduciaries should consider both the risks as well as the potential benefits of the digital assets. 

The Council further asserts that the comments by the Department are inconsistent with President Joe Biden’s Executive Order, which was also issued in March. Which tasks varied departments to study crypto and present the findings.  

But it seems like not all are against the US Labor Department as it has received support from Senators Elizabeth Warren and Tina Smith, who are popular crypto critics. Both of them issued a letter to Fidelity asking why the entity ignored the Labor Department’s guidance in March and how it would mitigate the risks related to Bitcoin (BTC). 

Fidelity then vowed to be in continuous dialogue with the lawmakers, similar to the cases of all its new products. It plans to launch the digital assets allocations next year. And would facilitate the investors to allocate up to 20% of their portfolio for virtual assets. 

Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.

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