The big question now for cryptocurrency investing in defined contribution plans is how amenable sponsors, participants and consultants will be to accepting these offerings to augment retirement savings.
Even before Fidelity Investments announced a program that would let participants invest up to 20% of their 401(k) accounts in cryptocurrency, NEPC LLC detected a "meaningful increase from clients asking for education on crypto within 401(k) plans," William Ryan, Chicago-based partner and head of defined contribution plan solutions at the investment consultant, wrote in an email.
The increase in inquiries started this year. "Like with most new or innovative things within DC, we expect this investigation by our clients will last well over a year," Mr. Ryan said.
The interest is coming from all age groups, "but the biggest push is coming from participants under the age of 30," according to comments from clients, Mr. Ryan said. NEPC believes these younger participants hold over 30% of their assets outside of their DC plans in cryptocurrency, he added.
"We are telling our clients to be thoughtful in their due diligence of crypto by thinking about the full landscape," Mr. Ryan wrote. "Many publicly traded companies are currently either suppliers or users of crypto technology. For that reason, today's DC investment options already provide participants the ability to invest indirectly into crypto technology through those companies."
Meanwhile, several NEPC consultants are meeting with Fidelity representatives to learn more about the program, and one client has asked NEPC to help evaluate if the Fidelity cryptocurrency option is "prudent for their plan," Mr. Ryan added. He did not name the client.
At the moment, MicroStrategy Inc., Tysons Corner, Va., is Fidelity's only announced client for its crypto investing program for 401(k) accounts, set to launch later this year.
The MicroStrategy 401(k) Savings Plan, Vienna, Va., had $221 million in assets as of Dec. 31, 2020, according to its latest Form 5500.