The bill is the Alabama Senator’s reaction to Senator Warren and the Department of Labor’s attempt to prohibit investments in Bitcoin (BTC) in self-directed 401(k) retirement savings plans.
Republican Senator Tommy Tuberville of Alabama has introduced the Financial Freedom Act, which would enable Americans to include cryptocurrencies in their 401(k) retirement savings plan without being constrained by governmental regulatory guidelines.
Tuberville’s proposed legislation is in reaction to the Department of Labor’s (DOL) push to keep cryptocurrency out of 401(k) investment plans because of its perceived risk to investors. The DOL has stated that employees who want to invest in cryptocurrencies through their 401(k) may face legal ramifications.
Senator Tuberville stated through a CNBC op-ed published on Thursday that: “The Federal Government has no business interfering with the ability of American workers to invest their 401(k) plan savings as they see fit.”
“Inconsistent with longstanding practice,” is what the senator called the change of the policy on March 10 by the DOL, prohibiting employees from using brokerage windows to self-direct income investments.
🚨 NEW BILL ALERT: I just introduced the #FinancialFreedomAct, allowing retirement savers to invest their 401(k) funds as they see fit.
The government should not be in the business of telling retirement savers how they can invest their money.https://t.co/6LGtpxquOW— Coach Tommy Tuberville (@SenTuberville) May 5, 2022
Brokerage windows enable 401(k) investors to determine the investments their account will invest as opposed to trusting and taking what the broker of their employer selects on their behalf.
The Senator went on to say: “The agency’s new guidance ends this tradition of economic empowerment in favor of Big-Brother government control. Additionally, the Labor Department’s overreaching guidance seeks to place a massive new regulatory burden on 401(k) plan fiduciaries by requiring them to assess the suitability of investments offered through a brokerage window and to restrict investment options.”
Fidelity Investments, the investment managing company stated in the last week of April that customers will be able to include Bitcoin (BTC) in their 401(k) accounts which led Democratic Senators Elizabeth Warren and Tim Smith to send a letter to Abigail Johnson, the CEO of Fidelity Investments citing conflict of interest against this decision since Fidelity has been involved with cryptocurrencies for 5 years now. “Significant risks of fraud, theft and loss,” were the characteristics of cryptocurrency investments as cited by the Democratic Senators in the letter.
Senator Warren has been a strong opponent of cryptocurrency investments, describing the sector as the “new shadow bank” in 2021.
Though the new guide of the DOL does not quite expressly mention Fidelity, it does state that violations of monetary law using cryptocurrencies may result in the closure of trading platforms, whereby investors would be inevitably harmed.
Senator Tuberville pledged that the Financial Freedom Act would bar the Department of Labor from restricting the types of investments that a self-directed 401(k) retirement plan might make. At the conclusion of his op-ed, he declared clearly that “The Labor Department should not be able to limit the range or type of investments retirement savers can select.”
Senator Tuberville continued to say the following: “Whether or not you believe in the long-term economic prospects of cryptocurrency, the choice of what you invest your retirement savings in should be yours — not that of the government.”
Until now, no other senators have publicly expressed backing for the new bill which would surely be supported by the American people. To be referred to the House of Representatives for additional review, it would have to receive a majority of votes in the Senate. Democrats presently possess a majority in the Senate, making the passing of the law a difficult task. Tuberville, on the other hand, has made his case effectively.