Platform lets retirement savers access crypto investments

Cryptocurrencies have lost value just like traditional stocks over the last year, but that’s not diminishing the push to incorporate them into retirement savings.

Plan provider ForUsAll Inc. recently launched Alt401(k), a platform that allows companies to give their workers the option of investing in cryptocurrencies in their retirement accounts. The platform offers traditional mutual fund investments as well as a self-directed brokerage window through which participants can choose alternative investments, such as cryptocurrency.

“Despite the recent downturn, cryptocurrency has been one of the fastest-growing asset classes over the last decade because it is the predominant way people invest in blockchain technology,” David Ramirez, ForUsAll co-founder and chief executive, said in a statement.

Investment in the growing blockchain sector shouldn't be limited to accredited investors who meet certain income and net worth thresholds or to institutional investors, Ramirez added.

Allowing access to crypto and other alternatives will help investors build wealth for retirement, Ramirez said in an interview.

“We wanted to make sure that Americans are not left behind in their 401(k)s,” he said.

More than 50 of ForUsAll’s small-business customers had enabled access to cryptocurrency investments for their participants as of last week, and 100 more are expected to join them soon, the firm said in the statement.

Since the platform started operating about three weeks ago, 12.5% of plan participants have activated the cryptocurrency window and have allocated an average 4% of their retirement savings, a company spokesman said.

The utilization of brokerage accounts in retirement plans is usually about 3% after several years, Ramirez said. The uptake on his firm’s platform demonstrates that savers want to add crypto and other alternative options to their retirement plans.

“It shows significant demand from plan participants to go beyond the limited set of mutual funds in the typical 401(k) menu,” he said.

The platform put a 5% ceiling on crypto allocations. Before plan participants can allocate to crypto, they must acknowledge risk disclosures and pass a quiz about the pitfalls of crypto investing.  

The rollout of the platform comes as ForUsAll is involved in a lawsuit against the Department of Labor over the agency’s March guidance warning retirement plans to think twice before offering cryptocurrency investments to participants.

The firm accuses the DOL of having exceeded its authority with what ForUsAll viewed as comments discouraging crypto use for retirement savings. The agency has asked a federal court to dismiss the suit.

A few weeks after the DOL issued its crypto guidance,  Fidelity Investments announced that it’s launching a crypto product on its 401(k) platform that will allow plan participants to invest in crypto through their company’s core investment menu.

The first plan sponsors to offer Fidelity’s Digital Assets Account “went live this fall, as expected,” a Fidelity spokesperson wrote in an email. 

Fidelity and DOL officials have discussed the firm’s crypto rollout. The agency said the talks did not assuage its concerns about crypto investing.

The Securities and Exchange Commission has been cracking down on crypto fraud over the last several months, while Chairman Gary Gensler has argued that most crypto offerings are investment contracts that fall under the jurisdiction of the agency.