Breaking News
Investing Pro 0
NEW! Get Actionable Insights with InvestingPro+ Try 7 Days Free

Crypto as an Alternative to 401(k)? Smells Like Teen Spirit

Cryptocurrency Jun 10, 2021 08:00AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Crypto as an Alternative to 401(k)? Smells Like Teen Spirit
 
BTC/USD
+3.06%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

  • The institutional investment branch of Coinbase will facilitate 401k investment alternatives.
  • 50 cryptocurrency assets will be available for investment, helping to broaden altcoin investment opportunities.
  • Retirement plan crypto investments have grown in popularity since 2020.

Increased exposure of institutional investors to cryptocurrencies is a narrative growing in importance as it is vital to the process of mass adoption. Volatility is a determinant of the lack of market liquidity, which could be ameliorated by the entry of significant investment funds. ForUsAll, a San-Francisco-based retirement plan provider, announced that they would be increasing exposure to cryptocurrency assets as part of their alternative 401(k) plan.

Cryptocurrency Assets As Alternative Investments

401(k) plans are workplace benefit plans that provide millions of Americans with the opportunity to save part of their salary through automatic enrollment. With cryptocurrencies just entering the spotlight of mainstream financial P.A, only a small portion of retirement funds target crypto assets.

ForUsAll announced a partnership with Coinbase International to offer crypto as potential alternative investments, denoting them to be an “exotic investment.” The press release stated, “By introducing the Alt 401(k), we are democratizing access to what drives wealth for the wealthy.”

Access to cryptocurrencies represents a paradigm shift for institutional investors who, according to a study, allocate 36% of their funds into cryptocurrencies and 80% of their funds into alternatives. The head of Institutional Coverage at Coinbase highlighted that additional investment options are the next step needed for crypto to reach a wider audience.

On the Flipside

  • In November 2020, Daim announced they would allow allocations of 10% towards Bitcoin investments as part of the 401(k) plan.
  • Cryptocurrency is still a volatile and risky investment, regardless of investment plan.
  • Crypto is only one type of alternative investment employers can access.
  • Users will pay a fee of 0.5% for each purchase, and a 1% annual fee.

Safe Passage For Crypto

Gen Z and Millenials account for the majority of cryptocurrency investors. 401(k) will help to give cryptocurrency exposure to an additional segment of Americans who’ve been left on the wayside due not having access to such innovations. David Ramirez highlighted that it is paramount that ForUsAll offers “access along with education, guidance, and guardrails” in order to facilitate the process “in a prudent fashion.”

ForUsAll, recommends investing in more enduring opportunities, such as stocks, bonds, or real estate, with only 5% being allocated to altcoins. This small allocation margin for crypto is not “a regulatory measure” but rather a recommendation for retirement investors.

The company will provide tools and resources for employees to get acquainted with crypto. The company will monitor their customers’ portfolios and alert them when they exceed 5%, helping them to “rebalance into more traditional mutual funds.”

New investment avenues will maintain the balance between younger and older investors. Through ForUsAll, employees will have access to the digital tokens so widely used by Millennials. DeFi protocols such as Algoland and Uniswap will be as yet unfamiliar additions to their 401(k) portfolio.

Crypto Investment Made Easy

Coinbase’s IPO partially facilitated Bitcoin and crypto’s entry into the financial mainstream. Coinbase International will act to streamline the back-end richness of the investment fund, securing and managing their assets.

The willingness of start-up companies to jump on the crypto bandwagon could be a catalyst for more established and noteworthy 401(k) entities to integrate crypto assets as an “alt-investment” into the existing options of their users.

Trillions of dollars have already been “forgotten” in 401(k) plans, illustrating the sheer volume that could pour into cryptocurrencies, and while increasing the capital of crypto might not directly equal an increase in prices, crypto could benefit from expanding towards a new investment demographic.

EMAIL NEWSLETTER

Join to get the flipside of crypto

Upgrade your inbox and get our DailyCoin editors’ picks 1x a week delivered straight to your inbox.

[contact-form-7] You can always unsubscribe with just 1 click.

Continue reading on DailyCoin

Crypto as an Alternative to 401(k)? Smells Like Teen Spirit
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email