Can we admit crypto is a bad idea for 401(k) plans?

Ary Rosenbaum
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Ary Rosenbaum - The Rosenbaum Law Firm P.C.

In the 30 plus years of investing, investing in cryptocurrency has been a wild ride. Mostly ups, but lots of downs. What makes sense as a small portion of investments that I’m willing to lose makes no sense as a 401(k) investment.

What we do in our private lives for investments in our business, what we allow as an investment in a 401(k) plan is different if we are a plan fiduciary or if we counsel them. The wild ride of Crypto, especially the negative volatility makes it clear that it’s a bad investment for most plan participants. When the crypto market plunged on a particular Sunday, I bought. Many 401(k) participants would have panicked and locked in their losses rather than wait the next day, only to see prices spike over 25% as a rebound.

Crypto is a highly speculative and unregulated investment, it doesn’t belong on a 401(k) fund lineup anytime soon.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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