401k and Cryptocurrency: The Wave of the Future (Proceed with Caution)

Wooden block with the number 401K with some money around. Concept: Retirement Plan in USA

This article was first published by Yahoo Finance! by Alexis Keenan.

The recent U.S. Labor Department (DOL) warning to fiduciaries who offer cryptocurrency investments inside 401(k) plans make sense, one crypto executive told Yahoo Finance.

“I think that the Department of Labor is right to say ‘heed caution,’ and don’t just jump barrel-in to this because it’s popular and you need to offer it — be pragmatic about it,” Chris Kline, COO, and co-founder of Bitcoin IRA — an investment platform that allows investors to roll over their IRAs and 401(k) ‘s into an IRA capable of holding multiple cryptocurrencies — said on Yahoo Finance Live (video above). “But I think the days of saying ‘Bitcoin is a fraud, and it’s over, and it’s gone,’ are behind us.”

The DOL’s action came on the heels of President Joe Biden’s executive order on Wednesday acknowledging cryptocurrency assets as prevalent enough to warrant federal studies and possible regulation. The agency’s Employee Benefits Security Administration said in a compliance assistance release that plan fiduciaries should exercise “extreme care” before offering cryptocurrencies and cryptocurrency-tied investments within 401(k) plans. The agency emphasized that the obligation of fiduciaries to act solely in the financial interests of plan participants is among the “highest known to the law.”

“Fiduciaries who breach those duties are personally liable for any losses to the plan resulting from that breach,” the department’s release said, adding that fiduciaries should not relinquish their legal duty to avoid “imprudent” investment options for 401(k) investors.

The DOL said that it plans to conduct a probe into plans that offer cryptocurrency and cryptocurrency-related investments within 401(k) savings plans and take action to protect plan participants’ investments. Plan fiduciaries, the department said, “should expect to be questioned about how they can square their actions with their duties of prudence and loyalty in light of the risks.”

Antalya, Turkey - May 21, 2021: Close up shot of Bitcoin and alt coins cryptocurrency

Read the rest of this fascinating story here.

(Editor’s Note) This article does not necessarily reflect the views of Montana Daily Gazette one way or another.


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