The US Department of Labor said Thursday that Cryptocurrencies, such as bitcoin and other digital assets, pose significant risks and challenges to 401(k) investors.
The labor agency warned that employers that add investments to their 401(k) plans may be in violation of their legal obligations to workers.
The bureau said that financial services firms have begun marketing retirement-plan options in recent months, playing off growing popularity.
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The U.S. Department of Labor has serious concerns about plans to expose participants to direct investments in cryptocurrencies or related products.
Employers who offer a 401(k) plan have a fiduciary duty. They have a legal duty to monitor and select investments.
Over the past decade or so, a lot of 401(k) lawsuits have alleged that workers lost money due to excessive costs and unwise fund choices.
The Labor Department outlined several risks and challenges in a compliance memo on Thursday.
According to the bureau, it may be difficult for investors to make an informed investment decision. The agency said that properties like losing the asset forever in the event of forgetting a password pose a hazard.
The Labor Department said that regulation may change quickly. On Wednesday, President Joe Biden issued an executive order calling on the government to look into the risks and benefits of virtual reality. Many people viewed the order positively.
Matt Hougan, chief investment officer at Bitwise Asset Management, told CNBC that the big question coming into the executive order was whether it was balanced or not.
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