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Crypto in retirement plans - should plan sponsors be considering it?

Image displaying text crypto currency.

Cryptocurrency’s use and popularity have recently skyrocketed. What was once considered a fringe technology has since become mainstream.

According to a recent Pew Research Center study, 86% of Americans are at least somewhat aware of cryptocurrency. Of course, money has followed that notoriety and the total global market capitalization of all cryptocurrencies exceeded $1.28 trillion as of May 2022. It stands to reason that the retirement industry, particularly defined contribution plans, would attempt to take advantage of the buzz surrounding digital assets. Fidelity recently announced its intention to be first in line by allowing 401(k) plan sponsors to offer cryptocurrency in its core 401(k) investment lineups.

Fidelity made its announcement on April 26, 2022, only a little more than a month following the DOL’s publication of a Compliance Assistance Release on the same topic. In that release, the DOL directs fiduciaries to “exercise extreme care” in considering a cryptocurrency option in their retirement program investment menus. To those familiar with the typically neutral tone of the DOL’s releases, this one reads as a solemn warning. 

There are many situations where being first is valuable, but retirement program fund array construction is not one. Nearly every industry best practice urges plan sponsors to establish a process, follow it, and document all decision points. A sponsor of a retirement plan would find themselves challenged in following any process regarding an asset class that did not exist before 2009 and has never been meaningfully regulated. 

It is likely, maybe even certain, that cryptocurrency will become more widely adopted in the coming years.

Individual investors can and should invest wherever they deem appropriate, but plan sponsors should not feel compelled to adjust their retirement program’s investment offerings because of recent financial-technology developments. As with many other fiduciary considerations, a “wait and see” approach would be best in the case of cryptocurrency in employer-sponsored retirement programs. There is no reward for early adoption, and if the DOL is to be believed, there may actually be fiduciary repercussions.


Please note – 403(b) Plans investments are statutorily limited to annuity contracts and/or custodial accounts and so would not have access to cryptocurrency investments.

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