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🎓 The United States issues a new warning regarding cryptocurrencies

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The US Department of Labor advised 401(k) plan participants to “exercise extreme caution” when dealing with cryptocurrencies and other digital assets, citing “serious risks” such as fraud, theft and financial loss.

The Department of Labor issued a stern warning to companies looking to increase their cryptocurrency 401(k) investments in a compliance report released Thursday, noting that any large cryptocurrency investment within company-sponsored retirement funds can attract legal attention.

Most American workplaces offer a 401(k) retirement savings plan that provides tax benefits and long-term financial security for participants.

And the Employee Income Security Act of 1974 (ERISA), which governs 401(k) investments, did not specify which asset classes should be included in a 401(k) plan. However, when making investment decisions, it directs trustees to “exhibit the care, skill, judgment, and diligence that a prudent person may show” in order to “reduce the risk of significant loss.”

ERISA also requires agents to monitor all investments on a regular basis to limit potential losses. As a result, highly volatile assets like cryptocurrencies can become increasingly unclear about 401(k) investments.

DOL’s current announcement comes as a growing number of financial institutions, such as ForUsAll Inc, which entered into a strategic relationship with Coinbase in June of last year, continue to offer crypto as an investment option for their fixed 401(k) retirement accounts. .

Additionally, EBSA Under Secretary Ali Khawar warned agents in the Department of Labor’s blog post accompanying the compliance report, saying, “The retirement savings of American workers and their families represent years of hard work. and sacrifice…and must be carefully guarded.”

Khawar noted that the Department of Labor was concerned about long-term investments in any type of digital asset.

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