Some 401(k) plans are now allowing cryptocurrencies as part of their asset balance.
Key Details
- Some 401(k) plans have changed to allow workers to invest retirement money into cryptocurrencies.
- Despite the changing nature of Bitcoin and other cryptocurrencies, some people are choosing to invest their retirement money into digital coins.
- Although these plans are allowing crypto investments, many people remain cautious because of the volatility of the investment class.
Why it’s news
Some workers are seeing changes to their 401(k) plans and the change is that they can not invest their retirement money into cryptocurrencies.
Many retirement plan companies have begun to allow people to use their retirement money to invest in certain cryptocurrencies. Demand has been looming over this new change for a while, but many people remain wary.
Just because the option is there doesn’t mean employees have to invest in the digital coins, but many are opting to do so.
Many workers who choose to invest in the cryptocurrencies with their 401(k) plan must
read the terms and conditions explaining the ever changing market of the coins and agree to understanding.
Concerns
There are many concerns regarding cryptocurrencies, but the main two are the volatility and not enough regulation in the market.
Due to the concerns many companies have declined the offer to add cryptocurrency investments to employees 401(k) plans.
Some companies declined because employees have not expressed the demand for it and others said it is too risky and not enough regulation.
The changes to allow crypto investments comes at a time where crypto isn’t doing the best. Cryptocurrencies had a rough summer hitting major slumps and big sell-offs.
June especially was a brutal month for cryptocurrencies. Bitcoin dropped 37.3% in that month alone—giving it the largest fall since 2011. The sell-off was triggered by inflation fears and investors trying to liquidate.
The major sell-off caused job cuts in many crypto companies and even forced some lenders to pause withdrawals. In July things started looking up as Bitcoin and other cryptocurrencies skyrocketed with a major comeback after the large tech-stock selloff.
Even though employees must choose to invest their money, many employers don’t want workers to risk losing their retirement money.
