After last week's bitcoin crash caught the attention of regulators and government officials, some Republicans in Congress today introduced a bill that would "protect" investors' ability to add bitcoin to their 401(k) retirement plans.
The bill is a companion to the Financial Freedom Act of 2022 passed by the House of Representatives, It was introduced by Rep. Byron Donald (R-Fla.) with the support of Representatives Warren Davidson (R-Ohio), Young-kwang Kim (R-Calif.), David Schweickert (R-Ariz.) and Tom Emmer (R-Minn.), among others. If the bill passes, the Labor Department won't be able to limit the types of investments 401(k) account holders can choose from, including bitcoin -- a limit Fidelity plans to offer later this year.
According to a press release, the bill was drafted in response to regulatory guidelines issued by the Employee Benefits Security Administration on May 10. The guidelines suggest banning investors from adding digital cryptocurrencies to their 401(k) pension plans. In a statement, the Congressman said Donatz's bill was designed to "protect American investors" from what he and his co-sponsors saw as "egregious examples of government overreach."
Last month, Fidelity Investments became the first brokerage firm to announce plans to start offering bitcoin investments to 401(k) accounts. The move drew skepticism and concern from Democratic Senators Elizabeth Warren and Tina Smith. Warren has long been a critic of cryptocurrencies and has previously called digital assets "a risk to our financial stability and economy."
The U.S. Department of Labor has also expressed concerns about Fidelity investments opening its retirement accounts to bitcoin. "We are deeply concerned about what Fidelity has done," Ali Hawa, acting assistant secretary of EBSA's Employee Benefits Security Administration, told the Wall Street Journal, referring to bitcoin's volatility.