US-based retirement plan provider ForUsAll is joining forces with Coinbase to allow clients to invest up to 5% of their portfolio assets in cryptocurrencies.
The pension provider, which primarily caters to small and medium-sized businesses, is working to offer exposure to more than 50 cryptocurrencies in a product called Alt 401 (k).
The company’s co-founder and chief investment officer, David Ramirez, admitted concerns about the offering of crypto products in pension portfolios due to their volatility, but argued that US citizens will be at a “disadvantage” if they are not given the option of accessing crypto assets in their retirement plans:
“The average American may be at a structural disadvantage relative to large institutions and high-net-worth individuals, and we just don’t think that’s right.”
ForUsAll manages $ 1.7 billion in retirement plan assets, representing a small portion of the $ 22 trillion retirement account markets.
In the United States, a 401 plan is an employer-sponsored defined contribution pension account defined in subsection 401 of the Internal Revenue Code.
Larger institutional investment firms, such as Fidelity Investments and Charles Schwab, do not allow clients to directly buy or sell cryptocurrencies in taxable accounts or individual retirement accounts. However, they can buy shares in trusts that invest in crypto assets from companies like Grayscale Investments.
Related: Fidelity’s Tom Jessop Says Cryptocurrencies Have Hit ‘Tipping Point’
One company that enables direct purchase of crypto assets and gold for retirement plans is BitcoinIRA, which was founded in 2016. Commenting on ForUsAll’s collaboration with Coinbase, BitcoinIRA Co-Founder and COO Chris Kline stated:
“ForUsAll and Coinbase wouldn’t be doing this if there wasn’t a market. There are people who want this with these types of funds. And they want access to new and exciting things with their 401 (k). “
MicroStrategy CEO Michael Saylor responded to ForUsAll’s decision to embrace cryptocurrencies.
If you invest 5% of your portfolio in #bitcoin, has made the decision to invest 95% of its portfolio in assets that will be demonetized by bitcoin.
– Michael Saylor (@michael_saylor) June 14, 2021
In April, Cointelegraph reported that pension funds and insurance companies have increasingly dedicated part of their asset bases to Bitcoin and crypto assets as concerns about inflation mounted amid the coronavirus pandemic.
In May 2020, Kingdom Trust, a regulated custodian managing more than $ 13 billion in assets, launched a retirement account that backs both Bitcoin and legacy assets.
The firm noted that when the Internal Revenue Service decided to tax Bitcoin, it directly allowed the asset to be held by qualified custodians and in retirement accounts.