Cryptocurrency, according to US Treasury Secretary Janet Yellen, is a “very risky investment” that she would not recommend to most people saving for retirement. Yellen did, however, mention that Congress could limit the types of investments that can be made in retirement accounts, such as 401(k) plans.
The question of whether Americans should be able to invest their retirement funds in cryptocurrencies is still being debated.
At a New York Times event on Thursday, US Treasury Secretary Janet Yellen was asked about Fidelity’s announcement to allow bitcoin as an investment option in 401(k) plans.
It’s not something that I would recommend to most people who are saving for their retirement … To me it’s very risky investment.
Fidelity’s announcement followed guidance issued by the Labor Department (DOL) warning 401(k) plan administrators about allowing cryptocurrencies in retirement plans. Fidelity is one of the biggest 401(k) plan administrators.
Ali Khawar, Acting Assistant Secretary of the DOL’s Employee Benefits Security Administration, said the Labor Department has “grave concerns with what Fidelity has done.” He stressed, “cryptocurrencies can present serious risks to retirement savings.”
Treasury Secretary Yellen also noted Thursday that Congress could regulate what assets could be included in retirement plans like 401(k). Commenting on whether Congress should take action, Yellen clarified:
I’m not saying I recommend it, but that to my mind would be a reasonable thing.
The Labor Department’s efforts to restrict Americans from putting crypto in retirement accounts have upset some lawmakers. In response, U.S. Senator Tommy Tuberville (R-AL) introduced the Financial Freedom Act to prohibit the DOL “from issuing a regulation or guidance that limits the type of investments that self-directed 401(k) account investors can choose through a brokerage window.” Furthermore, the Labor Department has been sued over its crypto guidance.