Concerns About 401K Cryptocurrency Plans And Digital Assets

The future of money and digital assets is a vast topic that presents numerous challenges, and it has even caused debate as to whether cryptocurrency is a prudent retirement plan investment. In its July 1, 2022 In Focus report, the Congressional Research Service nicely summarized the current developments concerning Cryptocurrency in 401(k) Retirement Plans. Of notable importance to ERISA plan fiduciaries, the Department of Labor expressed its concerns on March 10, 2022 about plan fiduciaries’ decisions to allow 401k plan participants to invest in cryptocurrencies in Compliance Assistance Release 2022-01. These concerns included the potentially speculative nature of cryptocurrency investments, the difficulties individuals might have in evaluating whether, or how much, to include in their investment portfolios, recordkeeping challenges, valuation concerns, and the regulatory environment. Whether cryptocurrency can be a viable retirement plan investment option remains to be seen. An appropriate regulatory framework for digital assets in general is being more broadly debated on Capitol Hill.

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