As Cryptocurrency’s popularity continues to grow, the Department of Labor (DOL) & Employee Benefits Security Administration (EBSA) have released guidance around the use of these investment options within retirement plans. View the complete guidance here.
Cryptocurrency investing has grown in popularity dramatically over the last several years as the value of cryptocurrencies such as Bitcoin and Ethereum have skyrocketed. And while investing in cryptocurrency is easily accessible for personal investments, there has been reluctance in the retirement plan industry to offer these types of options due to concerns around fiduciary considerations.
In an effort to attract more workers, some companies have begun to explore the option of making cryptocurrency investments available within their retirement plan. In response to this interest, the Department of Labor (DOL) / Employee Benefits Security Administration (EBSA) recently released guidance directed at retirement plan sponsors.
In their guidance, the DOL “cautions plan fiduciaries to exercise extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants” and indicated that EBSA expects to conduct investigations of plans that offer cryptocurrency investments to evaluate the considerations of prudence and loyalty demonstrated by the plan fiduciaries.
Specifically, the DOL’s guidance states several risks and challenges of making cryptocurrency investments available within a company’s retirement plan:
As a retirement plan advisor, Abbey Street is focused on the fiduciary issues that impact our retirement plan clients and will continue to closely monitor the evolution of cryptocurrency investing.