Crypto poses serious 401(k) risks, Biden administration warns

cnbc.com:

Cryptocurrencies, such as bitcoin and other digital assets like non-fungible tokens, pose «significant risks and challenges» to 401(k) investors, including fraud, theft and financial loss, the U.S. Department of Labor said Thursday.

The labor agency warned that employers that add crypto investments to their company 401(k) plans may easily run afoul of their legal obligations to workers who are plan participants.

That counsel comes as financial services firms have begun marketing such investments as retirement-plan options in recent months, playing off growing popularity, the bureau said.

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«At this early stage in the history of cryptocurrencies… the U.S. Department of Labor has serious concerns about plans' decisions to expose participants to direct investments in cryptocurrencies or related products, such as NFTs, coins and crypto assets,» Ali Khawar, acting assistant secretary at the Employee Benefits Security Administration, wrote Thursday.

Employers who offer a 401(k) plan have a fiduciary duty relative to the investments they make available. That legal duty requires them to prudently select investments and monitor them on an ongoing basis.

This duty has been the crux of a flurry of 401(k) lawsuits filed over the past decade or so, which have alleged workers lost money due to excessive costs and losses from unwise fund choices.

Relative to crypto in 401(k) plans, the Labor Department outlined several risks and challenges in a compliance memo on Thursday.

Crypto is speculative, volatile and hard to value, and