New York AG pushes prohibition of crypto purchases via retirement funds

The NYAG clarified that digital assets differ from blockchain technology, and it has no issues with citizens purchasing stakes in publicly traded blockchain-based businesses in retirement accounts.

The turmoil surrounding crypto exchange FTX and Sam Bankman-Fried (SBF) reaffirmed regulators’ belief about the need for stricter oversight across the crypto ecosystem. Seeking investor protection against a similar fallout, New York Attorney General (NYAG) Letitia James recommended prohibiting crypto investments in defined contribution plans and individual retirement accounts (IRAs).

In a letter addressed to the members of the U.S. Congress, James requested legislation that would bar U.S. citizens from purchasing cryptocurrencies and digital assets using their funds in IRAs and defined contribution plans such as 401(k) and 457 plans. However, a survey from October 2022 showed that nearly 50% of U.S.-based investors want to see crypto become a part of their 401(k) retirement plans.

James further pitched the rejection of two acts — the recently proposed Retirement Savings Modernization Act and the Financial Freedom Act of 2022 — that are aimed at allowing investments in digital assets. While highlighting SBF’s involvement in running a Ponzi Scheme and misappropriating users’ funds, James jotted down four primary reasons explaining her call to exclude digital assets from IRAs and defined contribution plans, as explained below.

First and foremost, the NYAG pointed out the importance of protecting retirement savings in the long term. Secondly, she highlighted Congress’ historical obligation to protect the retirement funds of U.S. citizens. James used narratives including frauds and lack of sufficient guardrails as her third reason to prohibit crypto investments. The final concern was around the volatility and custodial and valuation uncertainties.

On the other hand, the NYAG clarified that there is a distinction between digital assets and blockchain technology. She does believe that U.S. citizens should be allowed to purchase stakes in publicly traded blockchain-based businesses in retirement accounts.

Key considerations by NYAG for the prohibition of crypto investments via retirement funds. Source: ag.ny.gov (collated by Cointelegraph)

An immediate measure in this regard would be adding subparagraphs to existing laws — 26 U.S. Code § 408: Individual retirement accounts and 29 U.S. Code § 1104: Fiduciary duties — for prohibiting digital assets investments.

Related: US Senate committee schedules FTX hearing for Dec. 1, CFTC head to testify

United States senators Elizabeth Warren, Tina Smith and Richard Durbin requested Fidelity Investments reconsider its Bitcoin (BTC) offering to retirement savers, stating:

“The recent implosion of FTX, a cryptocurrency exchange, has made it abundantly clear the digital asset industry has serious problems.”

A Fidelity spokesperson told Cointelegraph that the company “has always prioritized operational excellence and customer protection.”

Related Posts

Gemini gets regulatory greenlight in Italy, Greece amid lending halt

Winklevoss’ Gemini exchange received the latest regulatory approvals days before its lending product Gemini Earn faced major issues. Winklevoss brothers’ cryptocurrency exchange Gemini continues expanding in Europe,…

Bullish news for Polygon: Partnerships, wallets & future outlook – Will MATIC price rise to $5?

The popular Phantom wallet announced support for the rapidly growing number of NFTs, games, and apps powered by Polygon. Polygon has seen a nearly 200 percent jump…

Famous trading bot chooses this ETH altcoin to outperform the market – This is how you profit

The Real Vision Bot is known for outperforming the digital asset market, and its historic performance was recently labeled as “astonishing” by Real Vision founder and macro…

Structural Adjustment: How The IMF And World Bank Repress Poor Countries And Funnel Their Resources To Rich Ones

The IMF and World Bank do not seek to fix poverty, but only to enrich creditor nations. Could Bitcoin create a better global economic system for the…

Report: Nigerian Securities Regulator to Exclude Crypto in its Digital Asset Agenda

According to Lamido Yuguda, the director general of the Nigerian Securities and Exchange Commission, the regulator does not plan on including cryptocurrencies in its digital asset agenda….

Is ApeCoin Treasury Cashing Out? Roughly 4.6 Million APE Sold Overnight

ApeCoin price has appreciated by over 40% since Nov. 18, making traders and investors hopeful of a final recovery. However, recent on-chain data paints a different picture…

Generated by Feedzy