On Thursday, the Labor Department said that it was aware of firms offering crypto 401k investment plans.
In a statement, the Labor Department has urged investors to take ‘extreme care’ before adding crypto to their 401k retirement plans. The department said that crypto poses significant challenges and risks to a participant’s retirement account.
At this early stage in the history of cryptocurrencies, the Department has serious concerns about the prudence of a fiduciary’s decision to expose a 401(k) plan’s participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies.
They also noted down risks such as fraud, theft, and loss. The letter highlighted that volatility, taking investment decisions based on popular vote, record-keeping and custodial concerns, lack of valuation methods for such assets, and uncertain regulatory environment as the major reasons why one shouldn’t opt for crypto for their 401k plans.
As per the statement, the Employee Benefits Security Administration has said that it plans to take suitable actions to protect the interests of 401k plan participants and beneficiaries concerning these investments.
According to an executive order signed by President Joe Biden on Wednesday, the “whole-of-government” effort to regulate the crypto industry is focused on leadership in the global financial sector, responsible innovation, financial inclusion, financial stability, illicit uses, and consumer protection.