US Lawmakers Push For SEC Action On Crypto 401(k) Plans
By: Isha Das
In a significant bipartisan effort, nine US lawmakers have urged the Securities and Exchange Commission (SEC) to act swiftly on an executive order initiated by former President Donald Trump. The order, dated August 7, focuses on integrating cryptocurrency investments into US 401(k) retirement plans, aiming to provide American retirees with alternative assets to enhance their investment portfolios. The executive order, titled “Democratizing Access to Alternative Assets for 401(k) Investors,” seeks to enhance the net risk-adjusted returns for Americans preparing for retirement.
The group of lawmakers, including House Financial Services Committee Chairman French Hill and Subcommittee on Capital Markets Chairman Ann Wagner, have sent a letter to SEC Chairman Paul Atkins, seeking regulatory clarity and immediate revisions to facilitate the order’s execution. They stressed the importance of collaboration between the SEC and the Department of Labor to ensure the adjustments in rules and guidance related to alternative asset access in participant-directed defined-contribution retirement savings plans.
The proposed changes not only involve the SEC making alternative assets more accessible in retirement plans but also reviewing bipartisan legislation concerning accredited investors. These legislative efforts are reflective of a broader strategy to adapt existing financial frameworks to include emerging asset classes like cryptocurrencies, which are gaining traction due to their potential for high returns. The initiative holds significant implications for the retirement savings market, which boasts assets worth $12.2 trillion, with 401(k) plans comprising $8.7 trillion of this total. Even modest allocations toward cryptocurrencies could translate into substantial new demand within these plans.
The push for this regulatory transformation aligns well with the Labor Department's decision to rescind, back in May, its earlier crypto compliance release from 2022. The reversal paved the way for the introduction of cryptocurrencies into retirement plans through target date funds and collective investment trusts. Implementation, however, depends on further agency guidance, product filings, and updates to investment policy statements. This evolving regulatory framework aims to enable more Americans to diversify their retirement savings with cryptocurrency, reflecting a growing trend in finance that acknowledges the potential of digital assets.
