The US Labor Dept cited 'serious concerns', stating that employers using 401(k) plans to invest in crypto may land themselves in legal trouble.
The US Department of Labor has told 401 investors to"exercise extreme care" when dealing with cryptocurrencies and other digital assets citing fraud, theft, and financial loss as “significant risks”., released on Thursday, the DOL offered a stark warning to employers that seek to increase their 401 exposure to cryptocurrencies, stating that any significant crypto investments within company-sponsored retirement accounts may attract legal attention.
Regarding the legislation surrounding 401 investments, the Employee Retirement Income Security Act of 1974 does not specifically detail which asset classes must be included in a 401. However, it does instruct fiduciaries to “show the care, skill, prudence, and diligence that a prudent person would exercise” when making investment choices “in order to minimize the risk of large losses.”
The recent DOL announcement comes as an increasing number of financial services begin to market crypto as an investment choice for 401 fixed retirement accounts, including ForUsAll Inc. whichthat accompanied the compliance report, Employee Benefits Security Administration Assistant Secretary, Ali Khawar, proffered caution to fiduciaries, stating, “The retirement savings of America’s workers and their families represent years of hard work and sacrifice… and [they] must be carefully protected.
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