Financial services for cryptocurrency holders have evolved over the years as a subset of the fintech industry. Now, crypto 401(k)s are entering the mix.
A small 401(k) provider called ForUsAll is now allowing participants to allocate up to 5% of their retirement funds in cryptocurrency.
The offering includes 50 different crypto assets, including bitcoin, which will be protected and managed by Coinbase Institutional. The company hasn’t said how many of its employer customers have signed up for the offering since its launch earlier this week.
Making bitcoin available through 401(k)s is one way to give retail investors easy and accessible exposure, CEO Jeff Schulte said on CNBC’s “Power Lunch” Thursday afternoon.
“We have seen a huge sea change in the investment world over the past few years,” he said. “Institutional investors are increasingly using cryptocurrencies as part of their portfolios, you see Harvard, Brown, Yale all including cryptocurrencies in their endowments. Unfortunately most Americans don’t have access to the same types of assets. is.”
The offering comes amid an active week for the price of bitcoin, which posted a 10% drop in the week before but rebounded and touched $37,000 before returning to the $36,000 range. Many still doubt that bitcoin can serve as a reliable store of value because of its price volatility, even with consumer prices rising more rapidly than in years.
“Not that the jury is out, but the verdict is in: Holding between 0-5% of a cryptocurrency as part of a well-diversified portfolio is an opportunity to increase expected growth without physically increasing volatility, That’s why we think it has a role to play,” Schulte said, adding that 60% of “all professional managers” say crypto now has a role in their portfolio.
there $6.7 trillion in 401(k) plans According to the Investment Company Institute, by the end of 2020, that represents about a fifth of the $34.9 trillion US retirement market.
ForUsAll manages $1.7 billion in assets for 70,000 employees.
“The 401(k) industry is generally slow to move forward,” Schulte said. “The fact that we are a small player allows us to see what is happening in the market, recognize trends that are absolutely irrefutable and take a position as a leader because we feel that the time That’s right. It’s not only appropriate for all Americans to have access to these kinds of investments, but it’s also appropriate.”
ForUsAll says it is the first company to offer crypto in 401(k)s. Other companies are working on crypto retirement offerings, including Kingdom Trust, which provides a hybrid self-service retirement platform where investors can buy, sell or hold stocks, ETFs and crypto assets in a single tax-advantaged account.