EXCLUSIVE: House Republicans on Friday unveiled a new bill that would prevent the Labor Department from restricting investment options available to employees in self-directed retirement accounts, and would allow Americans to add cryptocurrency to their 401(k) plans if they choose to do so.
The Financial Freedom Act, introduced by Rep. Byron Donalds, R-Fla., serves as a rebuttal to the latest political flashpoint: Cryptocurrency – and whether Fidelity Investment should be allowed to offer a retirement plan with bitcoin later this year.
Fidelity announced last month that it planned to offer bitcoin as an investment option in its 401(k) plans by the middle of the year, eliciting alarm from many Democratic lawmakers, including Sen. Elizabeth Warren, D-Mass., who expressed concern that the company may be exposing clients to a “risky and speculative gamble.”
But Republicans have rushed to defend Fidelity, accusing Democrats of governmental overreach and infringing on Americans’ free-market rights. GOP lawmakers have stressed that the legislation is about financial and investor freedom, not only cryptocurrency.
“In a far-reaching and sweeping endeavor to centralize power in Washington, the Biden administration is now attempting to dictate how the American people invest their hard-earned money,” Donalds said in a statement. “This administration, as well as any other government entity, lacks the authority to direct the financial future of America’s investors.”
The decision by Fidelity – an investment stalwart that manages about $2.7 trillion in assets – came shortly after the Labor Department warned against such a move, suggesting that if companies opted to invest their employees’ contribution plans in digital assets including Bitcoin, they could be investigated. In the March 10 notice, the DOL Employee Benefits Security Administration said fiduciaries “must exercise extreme care” before including direct investment options in crypto.
Fidelity, however, objected to that guidance, writing in an April 12 letter that the DOL failed to provide information on how fiduciaries can “fulfill their fiduciary duties in assessing cryptocurrencies.” The investment company will allow customers to put 20% of their savings into bitcoin; other cryptocurrencies will likely be added later.
About 23,000 companies use Fidelity for their companies’ retirement plans.
The House Financial Freedom Act serves as a companion bill to legislation introduced last week in the Senate by Sen. Tommy Tuberville, R-Ala.
“The government has no business standing in the way of retirement savers who want to make their own investment choices,” Tuberville said. “When you’ve earned your paycheck, how you invest your money should be your decision. Our legislation makes sure that is the case.”