The recent collapse of the defunct FTX Exchange and the subsequent loss of investors’ funds has brought about a lot of changes in the blockchain ecosystem.
The New York Attorney General (NYAG), Letitia James wrote a letter to the United States Congress on how individuals’ retirement funds can be protected from associated digital assets risks. In the letter, James urged congress to enact legislation that will prohibit the purchase of digital assets like cryptocurrencies with funds gotten from Individual Retirement Accounts (IRAs) and also from defined contribution plans such as the 401(k) and 457 plans.
James gave suggestions for the amendment of 29 U.S.C 1104(a) and 26 U.S.C 408 to prohibit the payment of digital assets out of an IRA or a defined contribution plan as a means to protect the funds of Americans. Additionally, she asked congress to reject the recently proposed Retirement Savings Modernization Act and the Financial Freedom Act of 2022.
James claimed that crypto does not provide individuals with ownership like bonds in corporations because their prices are not based on any inherent value even though they have become seemingly popular over the past ten years.
She added that her office has periodically issued warnings to retail investors because of the volatility in the crypto space.
Protection of the Digital Ecosystem
Letitia James has always fought for the protection of individual funds invested in crypto. In June, James issued a warning to residents of New York about risks related to investments associated with crypto because a lot of investors lost a lot of their funds at the time due to crypto market lows.
In her statement, the New York Attorney urged New Yorkers to carry out due diligence before investing in any crypto investment because even popular digital currencies from well-known trading platforms may still crash leaving investors to mourn their losses.
The United States President, Joe Biden has also issued a wake-up call for the regulation of crypto following the collapse of FTX. The President is calling for a group of 20 (G20) industrial leaders from different countries to form stricter regulations to prevent the future occurrence of loss of investors’ funds.
The Executive Vice President of Binance, Martin Bruncko has also stated his opinion on how the introduction of the European Union’s Markets in Crypto Assets (MiCA) can generate opportunities for crypto exchanges.
