Simply put
- Elizabeth Warren and Bernie Sanders have warned that President Trump’s plan to allow crypto investments in 401(k)s could jeopardize Americans’ retirement savings.
- In a letter to the SEC and Department of Labor, they called the policy “dangerous,” citing the volatility of cryptocurrencies and President Trump’s potential conflicts of interest.
- The senators asked whether the agency had investigated the risks of the new retirement plan or how much Trump’s family would benefit from it.
Elizabeth Warren and Bernie Sanders are warning that there could be “financial harm” to millions of Americans if the retirement industry heeds President Donald Trump’s advice and exposes 401(k) plans for riskier assets, including cryptocurrencies.
in letter In a letter sent this week to SEC Chairman Paul Atkins and Labor Secretary Lori Chavez Delemer, progressive senators warned about recent moves by the Trump administration. encourage 401(k) providers investing Americans’ retirement savings in cryptocurrencies and private markets could have devastating consequences.
The letter emphasized that it’s not just President Trump’s recent policies. presidential order While this is meant to encourage the retirement savings industry to embrace cryptocurrencies, the Department of Labor also rescinded a Biden-era policy that advised 401(k)s to use extreme caution when considering exposure to high-risk assets such as private market funds and crypto-exposed stocks and ETPs.
Sen. Ron Wyden (D-Ore.), Sen. Dick Durbin (D-Ill.), Sen. Jeff Merkley (D-Ore.), Sen. Chris Murphy (D-Connecticut), and Sen. Tina Smith (D-Minnesota) also signed the letter.
“[The Department of Labor] “The United States is currently working to legalize these financial products as safe investments for retirement savings. This reversal is troubling because American workers rely on retirement savings to live with dignity and independence as they age. This reversal is troubling because American workers rely on retirement savings to live with dignity and independence as they age,” the senators wrote. Retirement savings plans therefore legitimately deserve additional protection. ”
The letter highlights serious concerns raised in previous government investigations about how crypto investments differ from other forms of investment, which typically rely on retirement accounts to generate solid savings.
One such study by the Government Audit Office (GAO) found that crypto tokens do not generate profits for investors because they do not generate cash flows, and therefore can only generate profits if sold back at a higher price. The bureau said this makes future cryptocurrency prices nearly impossible to predict and is “more like gambling than productive investment.”
The letter also noted that President Trump: direct exposure to cryptocurrencyand the possibility that the $31 trillion retirement savings industry’s massive investment in cryptocurrencies could directly benefit him and his family. In fact, analysts predicted If 401(k) providers adopt cryptocurrencies as requested by the president, the development could inject billions of dollars into the digital asset space within a few years.
“How can the American people trust advice coming from an administration that could benefit even more from this move?” the senators said.
The Senate Democratic Caucus has asked the heads of the SEC and the Department of Labor to provide information in the coming weeks on their review of the risks posed by new “dangerous” retirement savings policies.
The senators asked, among other things, whether the Department of Labor intended to weaken existing rules regarding the due diligence required of fiduciaries. Whether the Department has investigated the risks posed to retail investors when their savings are invested in cryptocurrencies and private markets. And whether the Trump family has done any research into how much they stand to benefit from these new policies.
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