US Pension Funds Allowed to Use Digital Assets

The U.S. Department of Labor has rescinded its 2022 guidance that previously restricted the use of cryptocurrencies in 401(k)-type retirement plans.

Now employers can decide for themselves whether to offer their clients access to cryptocurrencies as part of savings programs. 401(k) plans are one of the main retirement tools in the United States — essentially an analogue of an individual investment account or the funded part of a pension in the Russian system. Participants in such programs direct part of their salary to a pension account every month, and the management company invests these funds in various financial assets. The total amount of funds under management in all 401(k) plans exceeds $8 trillion.

Until recently, the inclusion of crypto assets in pension portfolios remained rare and was implemented only in isolated cases through specialized solutions, which caused a cautious reaction from regulators. However, last year, the first spot Bitcoin ETFs were approved in the US, which allowed the cryptocurrency to be treated as a fully-fledged regulated investment product. This made it possible to technically include shares of such funds in 401(k) pension plans.

In its new statement, the department indicated that it no longer advocates for or opposes the use of digital assets in pension schemes. The issue of their inclusion now remains solely at the discretion of management companies if they consider this option appropriate and in the interests of their clients.

Earlier, it was reported that Brazil's National Monetary Council (CMN) imposed a ban on investments in cryptocurrencies for closed-end pension funds (EFPC).