Cryptocurrencies Frozen Bitcoin IRA deposits at Genesis show crypto retirement risks
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Even before the implosion of FTX, U.S. lawmakers and regulators were very leery about the way crypto was being marketed as a way of hedging or diversifying retirement plans. On Oct. 26, just weeks before FTX declared bankruptcy, CFTC Commissioner Christy Goldsmith Romero expressed her worry about what she was seeing.
Bitcoin IRA began offering its ‘IRA Earn’ retirement product in February 2021, when crypto markets were booming. IRA Earn promised annual returns of up to 6%. But unbeknownst to Bitcoin IRA customers, the company’s product was entirely dependent on Genesis, which had $2.8 billion in active loans at the end of Q3 2022.
“Fidelity Crypto is your opportunity to buy and sell bitcoin and ethereum in the Fidelity Investments App,” the company wrote on their website, promising clients the ability “to trade crypto with as little as $1 while also having an integrated view of both your traditional and crypto investments.” On Nov. 21, Senators Richard Durbin, D-Ill., Elizabeth Warren, D-Mass. and Tina Smith, D-Minn. sent a letter to Fidelity Investments CEO Abigal Johnson asking that the firm reconsider the decision to allow retirement plan participants to invest in cryptocurrency.
New York Attorney General Letitia James took matters further, sending a letter to members of Congress on Nov. 22, asking them to craft legislation that bans crypto investments in defined contribution plans and IRAs. James also called for Congress to reject the Retirement Savings Modernization Act and the Financial Freedom Act, both of which enable further investments in digital assets.
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