WASHINGTON, D.C.— Stephen Hall, Legal Director and Securities Specialist of Better Markets, issued the following statement in response to the Department of Labor rescinding guidance warning managers of retirement plans of the risks of offering employees crypto assets like Bitcoin and Ethereum:
“Today is another flagrant example of the Trump Administration putting crypto profits ahead of the economic stability and security of Americans. The Department of Labor (DOL), in rescinding 2022 guidance warning of the very real risks of dumping crypto into tax-exempt retirement plans like 401(k)s, has signaled that it’s open season for the lawless crypto industry to push their volatile assets into the preferred investment vehicle of tens of millions of workers.
“The previous DOL guidance, issued in March of 2022, likely saved millions of Americans from suffering grievous losses in their retirement accounts when the industry crashed later that year during the Crypto Winter. During that time, the collapse of Do Kwon’s scam stablecoin project Terra Luna, and the bankruptcies of FTX, Celsius, Voyager Digital and BlockFi created a domino effect, sending crypto prices crashing and resulting in billions of dollars of customer funds frozen as courts sorted through the wreckage. Unfortunately, the regulatory and enforcement framework for crypto has significantly deteriorated since the beginning of the Trump Administration, with the Securities and Exchange Commission and Department of Justice signaling a capitulation in favor of the industry. These actions pose extreme danger to investors and now, retirees.
“In addition to the massive volatility, crypto suffers from a real lack of transparency and oversight, including through its prolific use in criminal enterprises like ransomware attacks, sanctions violations, and schemes that victimize older Americans. Crypto likewise has demonstrated a heightened risk of fraud, hacks and loss, with a major crypto exchange just last week announcing theft of investor assets up to $400 million.
“Pension plan managers’ fiduciary duties to put their clients’ best interests first and of prudence, due diligence, and loyalty are not changed by this unwise, unwarranted, and dangerous action by the DOL. The mere fact this DOL took this action will not insulate pension plan managers from liability for breaching those duties. Given that, they would be well-advised to continue to exercise the ‘extreme care’ recommended in the now revoked 2022 guidance before putting crypto investment options into the retirement plans of tens of millions of American employees.”
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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.
