Two U.S. senators have written to Constancy Investments CEO Abigail Johnson, asking why the corporate determined to supply cryptocurrency as a stand-alone funding in purchasers’ 401(okay) plans.
“Investing in cryptocurrencies is a dangerous and speculative gamble, and we’re involved that Constancy would take these dangers with tens of millions of People’ retirement financial savings,” stated the Wednesdayletter from Sens. Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.).
The letter adopted Constancy’s April 26 announcement that contributors in DC purchasers’ plans can place as much as 20% of their 401(okay) plan accounts in a stand-alone cryptocurrency funding known as a digital belongings account.
Constancy, which is providing bitcoin within the account, stated sponsors can select to restrict how a lot contributors can put money into the cryptocurrency.
Ms. Smith is a member of the Senate Committee on Well being, Training, Labor and Pensions. Ms. Warren is a member of the Senate Particular Committee on Growing old.
The senators’ pointed to a March 14 “compliance help launch” from the Division of Labor telling outlined contribution plan sponsors to “train excessive care” in contemplating if cryptocurrency is an applicable funding in a retirement account.
They referenced a passage within the DOL doc that stated the company had “critical issues concerning the prudence of a fiduciary’s choice to show 401(okay) plan’s contributors to direct investments in cryptocurrencies.” In addition they cited DOL’s issues, recognized within the doc, about “the numerous dangers of fraud, theft and loss” associated to cryptocurrency.
In response to the letter, the corporate has a Could 18 deadline to reply questions, together with:
- “Why did Constancy ignore DOL’s ‘critical issues concerning the prudence of a fiduciary’s choice to show a 401(okay) plan’s contributors to direct investments in cryptocurrencies?'”
- “What dangers does Constancy assess that bitcoin presents to its clients?”
- “When Constancy made its choice to permit gross sales of bitcoin in retirement accounts, how did the corporate tackle its personal conflicts of curiosity, provided that the corporate now could be each a bitcoin miner and a purveyor of bitcoin?”
A Constancy spokesman couldn’t be instantly reached for remark.