Spot Bitcoin ETF Approval Can Allow More Crypto Exposure to 401(k) Retirement Plan

Bhushan Akolkar
December 26, 2023
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Bitcoin Fund

As the January 10 deadline approaches, retirement savers seeking exposure to Bitcoin without direct ownership of the cryptocurrency coins might soon find the access they desire. U.S. regulators are nearing a decision on whether to permit a spot bitcoin exchange-traded fund (ETF), designed to mirror the real-time price movements of Bitcoin.

Industry participants are optimistic that the U.S. Securities and Exchange Commission will grant approval. Recent reports suggest that the spot Bitcoin ETF approval could come as soon as December 29.

Bitcoin ETF to Fuel Exposure to Crypto

Participants in the industry anticipate that once these offerings are accessible, it won’t only be high-risk traders but also retirement savers who will enjoy increased access to crypto as an asset class. This access may be facilitated either through their company’s 401(k) plans or, if applicable, through solo 401(k)s and self-directed IRAs. Chris Kline, chief revenue officer of Bitcoin IRA said:

“It’s a big step toward mainstream adoption of bitcoin and cryptocurrency. [Investors] will have more options available”.

In recent years, numerous significant pension funds have allocated funds to crypto as an asset class. As per the 2022 CFA Institute Investor Trust Study, 94% of state and local pension plans had some level of exposure to crypto.

Fidelity Investments, the largest 401(k) plan administrator in the U.S., took a step in this direction by introducing a Bitcoin fund option in the fall of 2022. This move enables employees, comfortable with the associated risks and volatility of cryptocurrency, to invest in Bitcoin within their company-sponsored 401(k) plan.

Why SEC’s Approval Will Be A Game Changer

Employers have shown reluctance to include cryptocurrency in 401(k) plans, influenced by the U.S. Department of Labor’s 2022 guidance, as per industry experts.

Although the Department of Labor doesn’t explicitly prohibit crypto in company retirement plans, its March 2022 guidance tilted the scale against plan sponsors considering such inclusion.

If the SEC approves spot bitcoin ETFs as anticipated, there’s a likelihood that more companies will opt to incorporate it into their 401(k) offerings, according to Steven T. Larsen, a certified financial planner and founder of Columbia Advisory Partners in Spokane, Washington.

A spot bitcoin ETF could address certain concerns highlighted by the DOL, such as those related to custody, recordkeeping, and valuation. The presence of a professional manager in a spot bitcoin ETF, responsible for diversifying access to crypto, has the potential to mitigate risks, although it may not eliminate them entirely.

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Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
Bhushan is a seasoned crypto writer with over eight years of experience spanning more than 10,000 contributions across multiple platforms like CoinGape, CoinSpeaker, Bitcoinist, Crypto News Flash, and others. Being a Fintech enthusiast, he loves reporting across Crypto, Blockchain, DeFi, Global Macros with a keen understanding in financial markets. 

He is committed to continuous learning and stays motivated by sharing the knowledge he acquires. In his free time, Bhushan enjoys reading thriller fiction novels and occasionally explores his culinary skills. Bhushan has a bachelors degree in electronics engineering, however, his interest in finance and economics drives him to crypto and blockchain.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.