If you’re a plan sponsor, here’s what I’d tell you about the growing conversation around cryptocurrency in retirement plans.
1. Risks Are Real — and Fiduciary Responsibility Wins
Cryptocurrency might seem sexy or edgy, but from a fiduciary standpoint, it’s a minefield. Lack of regulation, market volatility, operational risk, and custody and valuation challenges all pose problems. Fiduciaries can’t simply shrug and hope “the millennials” want crypto. ERISA standards demand prudent due diligence and proper process.
Takeaway for sponsors: just because crypto is “on the menu” doesn’t mean you have to serve it. Or worse, force-feed it.
2. The Regulatory Weather Is Unsettled
Back in 2022, the Department of Labor issued a stern warning—telling plan fiduciaries to “exercise extreme care” before offering crypto in retirement plans. That guidance was later rescinded, shifting DOL’s position to a more neutral stance. But “neutral” does not mean “endorsing,” and it certainly doesn’t eliminate fiduciary risk.
The regulatory pendulum might swing again. If you’re thinking about crypto, keep your eyes on upcoming guidance and potential litigation issues.
Takeaway for sponsors: don’t assume the current hands-off posture means risk has evaporated, far from it.
3. Operational Complexity Can Be Overlooked, at Great Cost
Crypto doesn’t behave like a mutual fund or a bond. It raises real questions around:
· Custody: Who holds the asset, who controls the keys, and what happens if private keys are lost?
· Valuation: How do you price it on your plan books?
· Liquidity: Can participants get out when they need to?
· Recordkeeping, fees, and fund structuring: How do investment flows get tracked, reported, audited, and reconciled for ERISA compliance?
These aren’t trivial details, they’re everyday plan administration issues that can become fiduciary nightmares if mishandled. If your provider can’t show you how they’re solving these issues—don’t go there.
4. Education, Communication, and Participant Experience Are Key
Crypto is not a vanilla investment. Most people don’t understand blockchain, wallets, private keys, or volatility cycles. Participant understanding is a major concern.
It’s not enough to add a “crypto option” and assume participants will read a disclosure notice. Plan sponsors must educate and communicate clearly, especially about:
· upside and downside
· the speculative nature of crypto
· volatility and drawdowns
· the risk that participants could lose everything, especially if they get into crypto late in their saving timeline
Lesson: crypto isn’t just another TDF or large-cap equity fund with a shiny label. Treat it like a foreign language when you roll it out.
5. If You Do Consider It — Think Small, Wrapped, and Optional
If, after all that, you still think crypto deserves a place in your retirement lineup, here are a few guardrails to consider:
· Limit exposure. Don’t let crypto become a major part of the core default investment lineup. Treat it as a niche or optional exposure, not a central building block.
· Wrap it in a fund or managed product. Some sponsors may offer crypto exposure via target-date or multi-asset funds, or through professionally managed vehicles, rather than giving participants direct access to raw crypto.
· Use education and opt-in. If crypto is offered, make it opt-in, with clear participant disclosures, not a default or core menu item. Let participants choose it, don’t force it.
· Update your Investment Policy Statement (IPS). If crypto is being evaluated, your IPS needs to explicitly address it: how it will be evaluated, how performance will be monitored, how fund providers will be vetted, and how liquidity and risk assessments are built into the oversight process.
6. But Here’s the Bigger Picture: Crypto Is a Distraction from What Really Moves the Needle
Crypto is sexy, crypto is headline-grabbing, and crypto makes for great marketing speeches. But if you are a sponsor who hasn’t nailed your auto-enrollment design, your match formula, your participant communication strategy, or your low-cost qualified default investment alternative, then crypto is a distraction. Participants don’t save less because there’s no Bitcoin—they save less because they aren’t engaged, don’t understand what to do, or don’t get a match. They don’t retire because they don’t save, not because they didn’t have crypto.
Crypto may be “the next frontier.” But retirement savings failure today isn’t about missing the next frontier, it’s about not winning the frontier we’re already on.
Final Word
Crypto in retirement plans comes with real opportunity, but even more real risk. As plan sponsors, your job isn’t to chase every shiny new investment trend. It’s to build durable, well-designed, financially secure retirement plans, and to safeguard participants’ savings for decades—not for a spectacular crypto rally.
If you’re thinking about crypto, do your homework. Document your process. Ask hard questions. Don’t assume regulatory neutrality means risk is gone. And above all, ask yourself: Would I rather be the sponsor who led participants into a crypto windfall, or the sponsor who led participants through a crypto meltdown and into a lawsuit?
