FX.co ★ New York attorney general against crypto investments in retirement accounts

US authorities continue to shape legislation to regulate the cryptocurrency market. Recently, New York Attorney General Letitia James has urged Congress to pass a law prohibiting crypto investments in retirement accounts.

In the letter she sent to Sen. Ron Wyden (D-OR), Sen. Mike Crapo (R-ID), Rep. Richard Neal (D-MA), and Rep. Kevin Brady (R-TX) Tuesday, James wrote: "On behalf of the people of the state of New York, I urge Congress to pass legislation to designate digital assets - e.g., cryptocurrencies, digital coins, and digital tokens - as assets that cannot be purchased using funds in Individual Retirement Accounts (IRAs) and defined contribution plans, such as 401(k) and 457 plans."

James cited several reasons why cryptocurrencies were too risky to be used in retirement plans. In addition to having no intrinsic value, they are extremely unstable and often a tool for fraud and crime. The attorney general also referred to the collapse of Terra and FTX, followed by the sell-off in the cryptocurrency market. Notably, the cryptocurrency exchange FTX declared bankruptcy on November 11 amid investigations about mishandling customer funds. Against this backdrop, authorities in many countries have launched their own separate investigations. Recently, Turkey has joined them. The investigation is led by the country's Financial Crimes Investigation Council (MASAK), a division of the Ministry of Treasury and Finance. As part of the information available on criminal schemes, authorities have seized the assets of Sam Bankman-Fried and other affiliates.

Attorney General James also wrote: "Investing Americans' hard-earned retirement funds in crashing cryptocurrencies could wipe away a lifetime's worth of hard work. Over and over again, we have seen the dangers and pitfalls of cryptocurrencies and the wild swings in these funds. Hardworking Americans should not have to worry about their retirement savings being wiped out due to risky bets on unstable assets like cryptocurrencies."

James also wants lawmakers to reject two bills: the Retirement Savings Modernization Act and the Financial Freedom Act of 2022.

Fidelity Investments, the largest 401(k) administrator by assets, began offering bitcoin investments in retirement accounts this fall. This alarmed the US Department of Labor, and Treasury Secretary Janet Yellen warned that crypto was "very risky," noting that it was unsuitable for most retirement savers. This week, three US senators sent a letter to Fidelity CEO Abigail Johnson, urging her firm to stop offering bitcoin as an option for retirement accounts.

As for bitcoin, the price rebounded from the important level of $15,560 and the growth is limited by the resistance level of $16,630. If the pressure on the price returns, bulls will have to protect $15,560. If bears manage to break through this level, it may cause a serious blow to the asset. That would increase the pressure on bitcoin, opening the way to $14,650 and $14,370. If these levels are pierced, the world's first cryptocurrency may plummet to $13,950 and $13,675. The situation and panic in the market may be calmed only after bitcoin goes above $16,630. Going above this area, BTC is likely to be pushed back to the major resistance of $17,460. In this case, the asset may test $18,108.

Ethereum has recovered from the recent FTX shocks and now it is hard to say whether bulls are able to protect the support of $1,170. In order to weather the storm in the market, bulls should break through the nearest resistance of $1,210. That may be enough to cause changes in the market and cancel a new bearish wave. If the price fixes above $1,210, will calm the situation and Ethereum may hit a new high of $1,280. the next target is located in the area of $1,340. If the pressure on the trading instrument returns and the support of $1,173 is pierced, the level of $1,118 may become a new support. If the price goes below this level, the asset may touch the lows of $1,070 and $999. We have only $934 and $876 below that will be quite painful for crypto holders.