Bitcoin Spot ETF Approval Will Promote More 401(k) Retirement Plan Adoption

Optimistic view on the inflow of crypto assets into 401(k) retirement plans

According to CNBC, some industry insiders predict that if the SEC approves a Bitcoin spot ETF, Bitcoin will not Once again considered a high-risk transaction, this could lead to more 401(k) plans starting to invest in crypto assets.

Steven T. Larsen, founder of financial consulting firm Columbia Advisory Partners, said that if passed, more companies will decide to provide Bitcoin ETFs in their 401(k) series.

Organizations are wary of warnings from the U.S. Department of Labor

According to industry insiders, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) issued a warning in March this year, although it did not explicitly prohibit it. The introduction of cryptocurrencies into retirement plans has alarmed industry players. This warning is important for pension fund managers because the higher volatility and risk associated with cryptocurrencies may have a negative impact on the security and stability of pension funds. Therefore, industry players are cautious about this warning and will take appropriate measures to ensure the safety and sound operation of retirement funds.

Joshua Rubin, vice president of legal affairs at Betterment, a financial management institution, pointed out that although the Department of Labor has not explicitly banned Bitcoin spot ETFs, sponsors of 401(k) plans are very concerned about it. However, the emergence of a Bitcoin spot ETF may alleviate some of the Labor Department’s concerns about the product.

The Ministry of Labor proposed five major risks of cryptocurrency at that time:

High volatility

Valuation concerns

Suspicious custody and transaction records

Continuous The changing regulatory environment makes it difficult to make informed investment decisions

The Department of Labor mentioned in the announcement: The Department of Labor is aware that fund companies are promoting cryptocurrencies into 401(k) retirement plans. More generally, fiduciary fund institutions should comply with and fully understand that retirement plans should put the financial interests of users first, ensure prudence in selecting investment targets, and should not transfer responsibilities to users (trustees).

The tax advantages of long-term Bitcoin investors

Mark Parthemer, chief strategist at wealth management company Glenmede, said: Long-term investment in cryptocurrencies through retirement accounts can also enjoy tax benefits. In comparison, if the public If you store crypto assets in a regular brokerage account and sell them, you may be subject to capital gains taxes on the sale.

This is the same argument as Sui Chung, CEO of Kraken subsidiary CF Benchmarks. He pointed out in a previous interview that buying and selling Bitcoin ETFs through 401(k) will enjoy tax deferral benefits.

The above is the detailed content of Bitcoin Spot ETF Approval Will Promote More 401(k) Retirement Plan Adoption. For more information, please follow other related articles on the PHP Chinese website!