The turmoil surrounding cryptocurrency exchange FTX and Sam Bankman-Fried (SBF) confirmed the authorities’ conviction that tighter regulation is needed across the entire cryptocurrency ecosystem.

Letitia James, the New York Attorney General (NYAG), has proposed banning investments in CRYPTOCURRENCIES like bitcoin and ethereum in defined contribution plans and individual retirement accounts to protect investors from experiencing a similar type of loss (IRA).

James wrote a letter to members of the United States Congress, calling for legislation to prohibit United States citizens from using funds from their individual retirement accounts (IRAs) and defined contribution plans (such as 401 plans). (k) and 457 ) to buy cryptocurrencies and other digital assets.

On the other hand, the results of a study conducted in October 2022 indicated that nearly half of US-based investors want cryptocurrencies to be included in their 401(k) retirement plans.

Furthermore, James argued that the Retirement Savings Modernization Act and the Financial Freedom Act of 2022, which would legalize financial transactions involving digital assets, should be struck down. The Retirement Savings Modernization Act is a recent proposal, and the Financial Freedom Act of 2022 will take effect in 2022.

James noted four key reasons supporting his call to remove digital assets from IRAs and defined contribution plans when describing the SBF’s role in running a Ponzi scheme and misappropriating money from its members. These reasons will be detailed later.

The New York Attorney General emphasized, above all else, how vital it is to protect retirement funds throughout life.

Second, he called attention to the historic responsibility of Congress to safeguard Americans’ retirement savings.

As a final justification for banning cryptocurrency investments, James cited arguments such as the prevalence of scams and the absence of proper collateral.

Custody and value issues rounded out the list of things that caused anxiety, along with volatility.

The New York Attorney General’s office, on the other hand, explained that there is a separation between blockchain technology and digital assets.

She is of the opinion that citizens of the United States should be able to use retirement funds to purchase shares in publicly traded blockchain-based companies.