The approval of the SpotBitcoin ETF allows more Crypto Assets to participate in a 401(k) retirement plan

Many analysts believe that the Bitcoin ETF’s SEC approval will eliminate the Labor Department’s concerns about the risk of Crypto Assets exposure.

As the January 10 deadline approaches, retired savers seeking exposure to Bitcoin but not directly owning Crypto Assets may soon find the investment path they want. U.S. regulators are about to decide whether to allow SpotBitcoin exchange-traded funds (ETFs), which are designed to reflect the real-time price movements of Bitcoin.

Industry insiders are optimistic about the SEC’s approval. Recent reports suggest that the SpotBitcoin ETF could be approved as early as December 29.

Bitcoin ETF will drive Crypto Assets investment

Industry participants expect that once these products become available, not only will high-risk traders benefit, but retired savers will also enjoy more opportunities in Crypto Assets as an asset class. This access can be facilitated through the company’s 401(k) plan or, if applicable, through separate 401(k) and self-directed IRAs. Chris Kline, Chief Revenue Officer of the Bitcoin IRA, said:

“This is a big step towards mainstream adoption of Bitcoin and Crypto Assets, and investors will have more options.”

In recent years, many significant pension funds have allocated funds to Crypto Assets as an asset class. According to the 2022 CFA Institute Investor Trust Study, 94% of state and local pension plans have some level of Crypto Assets exposure.

Fidelity Investments, the largest 401(k) program administrator in the United States, took a step in that direction by launching a Bitcoin fund option in the fall of 2022. The move enables employees to adapt to the risks and fluctuations associated with Crypto Assets, making investments to use Bitcoin in their company-sponsored 401(k) initiatives.

Why SEC Approval Will Be a Game Changer

According to industry experts, employers are reluctant to include Crypto Assets in their 401(k) plans due to 2022 guidance from the U.S. Department of Labor.

Although the Department of Labor did not explicitly prohibit the use of Crypto Assets in corporate retirement plans, its March 2022 guidance tilted plan sponsors to consider Crypto Assets for inclusion.

Steven T. Larsen, a registered financial planner in Spokane, Washington, and founder of Columbia Advisory Partners, said that if the SEC approves SpotBitcoin ETF as expected, more companies may choose to include it in its 401(k) offerings.

SpotBitcoin ETFs can address some of the issues highlighted by the Department of Labor, such as those related to custody, record keeping, and valuation. The presence of a professional manager in SpotBitcoin ETF who is responsible for diversifying the Crypto Assets has the potential to drop risk, although it may not be completely eliminated.