A few weeks after EBSA released its compliance assistance report on March 10 – but before Fidelity’s announcement – a group of 11 industry associations, including the American Benefits Council, the ERISA Industry Committee and the Securities Industry and Financial Markets Association, wrote to Mr. Khawar calls on the EBSA to withdraw its cryptographic guidelines and “instead develop guidance in this area through the development of executive and comment rules.”
“We are very aware that the line between helpful under-regulation guidance and indirect rule-making is unclear,” the letter said. “But we respectfully suggest that the latest under-regulation guidance has been more of a regulatory nature requiring notice and comment” and review by the White House Office of Information and Regulatory Affairs.
“The Department’s new position on cryptocurrency is in violation of applicable law and adopted retroactively without notice, comment or review by OIRA,” the letter states.
Trade groups argued that the EBSA’s comment that trustees should exercise “extreme caution” in assessing the caution in offering crypto investments “creates confusion to which trustees are subject.”
Fidelity also complained. In a letter to Mr. Khawar on April 12, the company claimed that the compliance report “does not provide any constructive guidance on how the plan’s trustees can solve the problems identified by the department and perform their trusted duties in valuing cryptocurrencies”.
The guidance document “should be withdrawn and / or clarified”, states Fidelity’s letter, written by Mr. Gray.
Fidelity accused the department of going beyond educating trustees about their responsibilities regarding cryptocurrency in 401 (k) plans. Instead, according to the letter, the department seeks to “consider the choice of cryptocurrencies unwise.”
Meanwhile, 13 consumer and working groups welcomed the guidelines in a letter on April 26 to Mr. Khawar. The guidelines are “fully in line” with the “strict fiduciary duties imposed on plan administrators” by ERISA, the letter said, whose signatories included the Consumer Federation of America and the AFL-CIO.
“We all agree that it is entirely appropriate at this stage of the market development for the department to warn plantrustees to exercise extreme caution when considering exposing planholders to cryptocurrency assets,” the letter reads.
Two U.S. senators wrote to Fidelity Investment CEO Abigail Johnson on May 4, asking why the company decided to offer cryptocurrency as an independent investment in customers’ 401 (k) plans.
“Investing in cryptocurrencies is a risky and speculative bet, and we are concerned that Fidelity is taking these risks with millions of Americans’ retirement savings,” the sens letter reads. Elizabeth Warren (D-Mass.) And Tina Smith (D-Minnesota.).
They also asked Mrs Johnson to answer a number of questions before May 18, including: “Why did the Fidelity DOL’s ignore serious concerns about the prudence of a trustee’s decision? exposed participants in the 401 (k) plan for direct investment in cryptocurrencies? “and” What risks does Fidelity assess that bitcoin presents to its customers? “
Fidelity will respond directly to senators, a spokesman for the company said in an email on May 5. “We look forward to continuing our respectful dialogue with politicians to responsibly provide access to all appropriate consumer protection and training guidance to plan sponsors as they consider offering this innovative product,” he wrote.