A proposed rule from the U.S. Department of Labor to allow 401(k) retirement plans to allocate alternative assets such as cryptocurrencies was submitted to the White House Office of Management and Budget (OMB) for final review on Thursday. The proposal aims to streamline the process of allocating alternative investments to retirement plans and provide legal protection for employers and plan managers.
The proposal released by the Department of Labor in March did not limit the types of digital assets that could be included, nor did it set a minimum market value threshold, but it required program managers to assess investment risks from six aspects: performance, fees, liquidity, valuation, benchmarks, and complexity.
Teresa Goody Guillén stated that Bitcoin and Ethereum may gain adoption first due to their more mature markets and investment products, but altcoins are not automatically excluded and still need to meet requirements such as prudent investment, liquidity, valuation, and investor protection. Bernardo Brites pointed out that some small-cap tokens may struggle to meet historical performance and benchmark assessment requirements.
The proposal does not require crypto investments to be made through ETFs or managed funds, but Teresa Goody Guillén anticipates that such investment products may precede direct holding of cryptocurrencies in 401(k) retirement plans.
