Senate Bill Seeks to Reverse Retirement Plan Crypto Warning

Senator Tommy Tuberville, R-Alabama, has reintroduced legislation that aims to reverse guidance issued by the Department of Labor’s Employee Benefits Security Administration in 2022 that discourages retirement plans from including cryptocurrency assets or other alternative investments in their offerings.

The Financial Freedom Act would prohibit the secretary of labor “from constraining the range or type of investments that may be offered to participants and beneficiaries of individual retirement accounts who exercise control over the assets in such accounts,” according to a Tuberville statement.

In its guidance, EBSA stated that crypto investments “present significant risks and challenges to participants’ retirement accounts” and violate plan administrators’ fiduciary duty. It also states that it will investigate and “take appropriate action” against retirement plans that ignore the guidance.

Although the text of the bill makes no mention of cryptocurrency or digital assets, it argues that the Employee Retirement Income Security Act of 1974 does not prohibit a fiduciary from including “any particular type of investment alternative,” as long as a fiduciary provides a broad range of investment alternatives. The bill states that the secretary of labor cannot issue regulations or sub-regulatory guidance “constraining or prohibiting the range or type of investments” offered through brokerage windows.

“Meddling in 401(k) investments through overregulation restrains financial growth and restricts personal liberty,” Tuberville said in a statement. “The federal government, which is $36 trillion in debt, shouldn’t be telling anyone how to invest their money.”

The bill is co-sponsored by Senator Cynthia Lummis, R-Wyoming. It was introduced on April 1 and referred to the U.S. Senate Committee on Health, Education, Labor and Pensions.

Tuberville also introduced a bill that would prohibit the Commodity Futures Trading Commission from registering a digital asset platform that is owned in whole or in part by an entity organized or established in China. The Prohibiting Foreign Adversary Interference in Cryptocurrency Markets Act would also require the CFTC to revoke the registration of any digital commodity platform “if a covered entity acquires all or any part of the ownership of the digital commodity platform.”

According to Tuberville, allowing China-based entities to participate raises “serious concerns” related to investor protection, data privacy, national security, sanctions compliance and anti-money laundering efforts.

That bill is co-sponsored by Senator Cindy Hyde-Smith, R-Mississippi.