Sens. Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.) in a letter to American multinational monetary companies firm Constancy Investments Inc. argue that cryptocurrency is just too dangerous an funding for retirement savers’ 401(ok) plans.
Within the letter despatched to Constancy CEO Abigail Johnson on Wednesday, the 2 lawmakers observe their issues over the corporate providing bitcoin as an choice for its 401(ok) traders and ask how Constancy is managing conflicts of curiosity with its personal cryptocurrency mining operation.
The letter additionally mentions bitcoin’s “risky historical past,” mentioning that the cryptocurrency has recorded big drops in worth within the inventory market and that Tesla CEO Elon Musk’s newest tweets have triggered its worth to fluctuate.
“Bitcoin’s volatility is compounded by its susceptibility to the whims of only a handful of influencers. Elon Musk’s tweets alone have led to Bitcoin worth fluctuations as excessive as 8%,” the lawmakers write of their letter.
“The excessive focus of Bitcoin possession and mining exacerbates these volatility dangers. One examine estimates that simply 10% of Bitcoin miners are accountable for processing 90% of Bitcoin transactions and that 1,000 people management 3 million Bitcoins — about 15% of the present Bitcoin provide.”
“Briefly, investing in cryptocurrencies is a dangerous and speculative gamble, and we’re involved that Constancy would take these dangers with hundreds of thousands of People’ retirement financial savings,” the letter stated.
The lawmakers ask Johnson to offer solutions to a number of questions contained within the letter, equivalent to why the corporate ignored the Labor Division’s issues about cryptocurrency in 401(ok) plans and what dangers bitcoin presents to their prospects.
Constancy introduced final month that it’ll provide bitcoin funding to 401(ok) holders, saying its new Digital Property Account will enable traders to allocate the cryptocurrency into their retirement financial savings accounts.
Warren and Smith’s letter requests that Johnson present them with solutions to their query by Might 18.
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