The US House Ways and Means Committee chairman has asked the Government Accountability Office (GAO) to study cryptocurrency investment options in the major defined contribution (DC) plans.
The DC plans include public retirement savings plans like 401(k) pension plans.
Chairman Richard Neal, D-Mass., sent a letter on Wednesday to GAO Comptroller General Gene L. Dodaro in which he expressed concern over public retirement savings plans offering crypto options to participants.
In his letter, Neal stated: “Recent announcements from major DC plan providers indicate that many employers who sponsor DC plans will have the option to allow their employees to invest in cryptocurrencies. However, concerns have arisen about the risks to older Americans’ retirement security of using retirement accounts to invest in cryptocurrencies due to their volatility and limited oversight.”
Neal asked GAO to determine the extent to which crypto investment options are provided by companies offering retirement savings plans.
The chairman also asked GAO to assess how such firms administer crypto pension investment options, like determining their valuation, the types, and levels of fees charged for such services, and safeguards.
The chairman further asked GAO to assess the oversight of crypto investment options in 401(k) plans by the relevant agencies, and guidance federal agencies offer to plan sponsors, participants, and beneficiaries about investing in crypto and examine the current restrictions on investments in cryptocurrency in 401(k) plans.
Crypto Retirement Accounts Rise
There is greater interest in digital assets. A significant number of pension firms are increasingly seeking to invest in cryptocurrencies.
In October last year, the Houston Firefighters’ Relief and Retirement Fund (HFRRF) made a $25 million investment in Bitcoin and Ether on its balance sheet.
In 2019, two Virginia Pension Funds – the Fairfax County Police Officers Retirement System (PORS) and Fairfax County Employees’ Retirement System (ERS) – invested $11 million and $10 million respectively in Bitcoin and further invested $50 million into the crypto in 2021.
The Department of Labor, which regulates 401(k) plans, has not explicitly banned the use of crypto as a 401(k)-investment option. In March, the regulator cautioned retirement plan managers to be judicious when it comes to cryptocurrencies.
Last month, Fidelity Investment, a major large retirement services platform, started offering a Bitcoin 401(k) product to users.
In June last year, a small 401(k) provider called ForUsAll started allowing consumers to allocate up to 5% of their retirement funds into cryptocurrency.
Meanwhile, Republicans on Capitol Hill have become open to crypto options in retirement plans. In May, Senator Tommy Tuberville, R-Ala., introduced a bill that seeks to bar the Labor Department from issuing a regulation or guidance that limits the type of investments 401(k) plan participants can choose through a brokerage window.
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Source: https://blockchain.news/news/us-house-committee-chairman-seeks-insights-into-crypto-retirement-plans