US Labor Dept warns of crypto risks in retirement plans

cointelegraph.com:

The US Department of Labor (DOL) has told 401(k) investors to "exercise extreme care" when dealing with cryptocurrencies and other digital assets citing fraud, theft, and financial loss as “significant risks”. 

In a compliance report, released on Thursday, the DOL offered a stark warning to employers that seek to increase their 401(k) exposure to cryptocurrencies, stating that any significant crypto investments within company-sponsored retirement accounts may attract legal attention.

A 401(k) is a retirement savings plan offered by most American employers that extend tax advantages and long-term financial security to those that opt-in.

Regarding the legislation surrounding 401(k) investments, the Employee Retirement Income Security Act of 1974 (ERISA) does not specifically detail which asset classes must be included in a 401(k). 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.”

ERISA also extends a legal obligation to fiduciaries to monitor all investments on an ongoing basis in order to further mitigate any losses. This means that extremely volatile assets such as cryptocurrencies may yet prove to be increasingly ambiguous in regards to 401(k) investments.

The recent DOL announcement comes as an increasing number of financial services begin to market crypto as an investment choice for 401(k) fixed retirement accounts, including ForUsAll Inc. which announced a strategic partnership with Coinbase in June last year.

In a DOL blog post that accompanied the compliance report, Employee Benefits Security Administration (EBSA) Assistant Secretary, Ali Khawar, proffered caution