Crypto in Retirement Accounts? Are You Kidding?

Cryptocurrencies are the exact opposite of a prudent investment: They’re volatile, have little practical use beyond speculation and crime, often get lost or stolen, and lack the real-world cash flows that underpin the values of stocks and bonds.

It should thus go without saying that they have no place in a retirement savings plan. Unfortunately, it appears to require saying.

Increasingly, financial institutions are seeking to get crypto into the employer-sponsored 401(k) plans where workers set aside pre-tax earnings for retirement — and which, as of December, contained about $11 trillion in assets. Last year, the plan provider ForUsAll announced a partnership with Coinbase that would allow employees to put as much as 5% of their accounts into cryptocurrencies via a so-called brokerage window. Earlier this year, Fidelity Investments, among the country’s largest 401(k) providers, said it would soon let participants invest as much as 20% in Bitcoin, if employers choose the option. MicroStrategy Chief Executive Officer Michael Saylor, an outspoken Bitcoin advocate, immediately said he’d be in.

Advocates offer various justifications for this misguided idea. They say Americans deserve more choice, citing surveys showing that millennials in particular tend to see crypto as a desirable investment. They say digital assets can diversify a given portfolio because their price fluctuations aren’t synced with other markets. Proper financial education, they insist, can help people understand the risks.