Durbin, Brown, Warren, Smith Urge Department of Labor to Investigate Retirement Plans That Offer Investments In Crypto
WASHINGTON – Following the Department of Labor’s (DOL) March 10, 2022, guidance related to 401(k) plan investments in cryptocurrencies, U.S. Senate Majority Whip Dick Durbin (D-IL), along with Senators Sherrod Brown (D-OH), Elizabeth Warren (D-MA), and Tina Smith (D-MN) sent a letter to Secretary Marty Walsh urging DOL to expeditiously act on the announcement that it would investigate plans that offer investments in crypto. The Senators requested that DOL provide a detailed report outlining any actions that are needed to further protect plan participants from the risks of crypto.
The Senators wrote, “Crypto is an unstable and unregulated speculative asset that is subject to extreme price volatility. It has no place in the retirement savings of hardworking Americans… It is deeply troubling that despite the extreme price volatility, well-trusted and respected providers of retirement services have chosen to offer exposure to crypto in 401(k) plans. Given the severity of the risks associated with crypto, this ill-advised decision is dangerous and irresponsible. It also begs the question how plan fiduciaries—subject to prudence and loyalty obligations—can justify allowing such investments.”
“As we approach one year since the Department of Labor released its guidance on the inclusion of cryptocurrencies in 401(k) plans, we strongly urge the Department to expeditiously act on the announcement that it ‘expects to conduct an investigative program aimed at plans that offer participant investments in cryptocurrencies and related products, and to take appropriate action to protect the interests of plan participants and beneficiaries with respect to these investments.’ Following completion of the investigation, we also request a detailed report outlining any actions and/or policy recommendations that are needed to further protect plan participants from the risks of crypto. Time is of the essence. The financial future and stability of millions of Americans is on the line,” the Senators continued.
In the letter, the Senators applauded DOL for the March 2022 guidance related to 401(k) plan investments in crypto, which stated “these investments present significant risks and challenges to participants' retirement accounts, including significant risks of fraud, theft, and loss.” The Department cautioned plan fiduciaries to “exercise extreme care” before considering the inclusion of crypto in 401(k) plans. The Senators also commended DOL’s commitment to protect the interests of hardworking Americans who have saved for years to retire in dignity.
Durbin has continuously raised concerns about the inclusion of crypto in retirement accounts, especially how it exposes plan participants to unnecessary risk and could have devastating impacts. He previously spoke on the Senate floor highlighting the dangers crypto poses to personal finances and retirement.
Full text of the letter is available here and below:
March 9, 2023
Dear Secretary Walsh and Assistant Secretary Gomez,
On March 10, 2022, the Department of Labor (the Department) issued guidance related to 401(k) plan investments in cryptocurrencies (crypto). At that time, the Department expressed “serious concerns about the prudence of a fiduciary's decision to expose a 401(k) plan's participants to direct investments in cryptocurrencies.” The Department went on to state “these investments present significant risks and challenges to participants' retirement accounts, including significant risks of fraud, theft, and loss.” The Department cautioned plan fiduciaries to “exercise extreme care” before considering the inclusion of crypto in 401(k) plans.
We applaud the Department’s March 2022 guidance. Millions of Americans rely on their 401(k) investments to retire with dignity. Crypto is an unstable and unregulated speculative asset that is subject to extreme price volatility. It has no place in the retirement savings of hardworking Americans. In the last year, the digital asset industry has grown even more volatile, tumultuous, and chaotic. The value of Bitcoin alone dropped more than 60 percent in 2022. The inclusion of crypto in retirement accounts exposes plan participants to unnecessary risk and could have devastating impacts.
It is deeply troubling that despite the extreme price volatility, well-trusted and respected providers of retirement services have chosen to offer exposure to crypto in 401(k) plans. Given the severity of the risks associated with crypto, this ill-advised decision is dangerous and irresponsible. It also begs the question how plan fiduciaries—subject to prudence and loyalty obligations—can justify allowing such investments.
As we approach one year since the Department of Labor released its guidance on the inclusion of cryptocurrencies in 401(k) plans, we strongly urge the Department to expeditiously act on the announcement that it “expects to conduct an investigative program aimed at plans that offer participant investments in cryptocurrencies and related products, and to take appropriate action to protect the interests of plan participants and beneficiaries with respect to these investments.” Following completion of the investigation, we also request a detailed report outlining any actions and/or policy recommendations that are needed to further protect plan participants from the risks of crypto. Time is of the essence. The financial future and stability of millions of Americans is on the line.
We commend the Department’s commitment to protect the interests of hardworking Americans who have saved for years to retire in dignity. These families deserve better than to have their life savings subjected to the uncertainty and extreme volatility of crypto.
Thank you for your attention to this timely and important issue. We look forward to your response.
Sincerely,
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