NYAG Opposes Bills to Remove Obstacles to Adding Crypto to Retirement Accounts

FILE PHOTO: New York State Attorney General Letitia James in New York City, U.S., November 19, 2019. REUTERS/Lucas Jackson

The New York Attorney General’s office issued a statement opposing two bills working their way through Congress that would remove obstacles to adding cryptocurrencies to retirement accounts.

The bills will allow crypto investments in retirement plans like IRAs, 401(k) plans, and 457 plans and forbid regulators to restrict access to holding cryptocurrencies in investment plans. One of them is the Retirement Savings Modernization Act introduced in the Senate by Senator Patrick Toomey (R-PA). This bill proposes an amendment to the Employee Retirement Income Security Act of 1974 to remove liability for breach of fiduciary duties purely for recommending, selecting, or monitoring any covered investment or causing a plan to incur expenses related to a covered expense. It expands the list of covered investments to include investment options that did not exist in 1974, such as digital assets.

A bill with an identical title was introduced in the House of Representatives by Representative Peter Meijer (R-MI-3). It includes pretty much the same text and was referred to the House Committee on Education and Labor.

New York Attorney General (NYAG) Letitia James predictably cited Bitcoin’s high volatility and crypto-related financial crimes when urging Congress to oppose the bills.

“Over and over again, we have seen the dangers and pitfalls of cryptocurrencies and the wild swings in these funds. Hardworking Americans should not have to worry about their retirement savings being wiped out due to risky bets on unstable assets like cryptocurrencies. I urge Congress to take action to protect working families from having their retirement accounts dry up because of crypto investments,” she said in the statement released by her office.

The NYAG’s office has a history of opposing crypto investments under Letitia James. In March 2021 and June 2022, it issued statements warning investors about the risks involved in investing in cryptocurrencies. It has also taken a hardline stance against fraud and illegal activity committed by crypto firms, including opening investigations into Coinseed, Bitfinex/Tether, BlockFi, and Nexo Capital.

Government officials like ones in the Labor Department have also echoed concerns about adding crypto to a retirement account, as seen in the below video:

However, that hasn’t stopped crypto insiders from supporting it. Some institutions see it as just one of several assets that could be added to a retirement account. A few individuals like Jack Sweeney plan to retire on Bitcoin.

New York’s state government has become unpopular among the cryptocurrency community for its perceived unfriendliness toward digital assets. In July 2014, the New York Department of Financial Services unveiled the “BitLicense,” which requires crypto trading companies to pass background checks, know all their customers, be open to regulator inspection at any time and keep 100% of account reserves on hand.

Required background checks and KYC procedures especially upset the cryptocurrency community, which traditionally supports financial privacy. Ten crypto firms pulled out of New York over the BitLicense. Perhaps noticing the backlash against state-level licensing plans, California governor Gaven Newsom vetoed a similar “BitLicense” scheme earlier this year.

More recently, New York’s governor signed a two-year moratorium on Proof-of-Work cryptocurrencies, citing climate change concerns. Opponents of the moratorium said big crypto miners could move to other states like Texas and gives New York a reputation for opposing innovation.

Want to tell Congress what you think of the Retirement Savings Modernization Act and adding crypto to retirement plans? You can find out how to contact your senators on Senate.gov and your representative on House.gov.