I just read this morning that ForUsAll Inc., a 401(k) provider to roughly 400 plans (total AUM of $1.7 billion) has entered into agreement with a division of Coinbase Global to offer access to cryptocurrencies – bitcoin, ether, litecoin, etc. – through the workers’ 401(k). The potential investment is limited to 5%. Do we really want unsophisticated employees making an investment in these instruments given the extreme volatility we are witnessing? There are on-going efforts within the 401(k) community to provide participants with access to private/alternative investments, but in nearly every other example, there is an underlying fundamental story or balance sheet supporting the product.
The WSJ article did not mention the cost of investing in cryptos, but they did highlight the fact that ForUsAll would notify the participant when their exposure neared or exceeded 5% so that they could rebalance their exposure. Are they going to inform the participant when the original investment has been cut in 1/2 or more?