Financial services for cryptocurrency holders have grown into a subset of the fintech industry for years, and now crypto 401(k)s are entering the mix.
A small 401(k) provider called ForUsAll allows participants to allocate up to 5% of their retirement funds in cryptocurrency.
The offer includes 50 crypto assets, including bitcoin, that will be maintained and managed by Coinbase Institutional. The company did not specify how many employer clients have subscribed to the offer since it launched earlier this week.
Making bitcoin available through 401(k)s is a way to make it easy and accessible to retail investors, CEO Jeff Schulte said on CNBC’s “Power Lunch” Thursday afternoon.
“In the past few years We have seen a huge shift in the investment world,” he said. “Institutional investors are increasingly using cryptocurrencies as part of their portfolios. You see, Harvard, Brown, Yale all include cryptocurrency. in their donations Unfortunately, most Americans do not have access to the same assets.”
The offer came during the week when the price of bitcoin dropped 10% earlier in the week. But it bounced back and briefly hit $37,000 before returning to the $36,000 range. Many still wonder if Bitcoin can act as a reliable store of value due to its price volatility. Even though consumer prices are higher faster than they have in years.
“It’s not that the jury is out. But the verdict is in: holding between 0-5% of the cryptocurrency as part of a well diversified portfolio has the opportunity to boost expected growth without significantly increasing volatility. So we think it has a role to play,” Schulte said, adding that 60% of “all professional managers” say crypto plays a role in their portfolios.
401(k) funds are planned for $6.7 trillion at the end of 2020, according to the Investment Company Institute, accounting for about one-fifth of the $34.9 trillion retirement market.
ForUsAll Manages $1.7 Billion Assets for 70,000 Employees
“The 401(k) industry tends to move slowly,” Schulte said. “Being a small player allows us to see what is happening in the market. Recognize a trend that is totally irrefutable. and take the leadership position because we think the time is right bringing access to this type of investment to Not only are all Americans eligible. but also appropriate”
ForUsAll says it is the first to offer crypto in 401(k)s. Other companies are working on crypto retirement offerings, including Kingdom Trust, which has a hybrid self-service retirement platform that investors can access. Buy, sell or hold stocks, ETFs and crypto assets in one taxable account.