Even as the crypto market continues to forge an impressive recovery from the 2022 bear market, the industry continues to attract the wrath of regulators worldwide, especially in the United States. Three U.S. financial watchdogs recently issued stern warnings to individuals looking to invest in retirement funds offering exposure to digital assets.
The U.S. Securities and Exchange Commission’s (SEC) Office of Investor Education and Advocacy, the North American Securities Administrators Association and the Financial Industry Regulatory Authority (FINRA) warned investors that individual retirement accounts (IRAs) that include cryptocurrencies could potentially be classified as “securities,” unless they are registered with the SEC or have a valid exemption certificate.
Moreover, in the past year, many policymakers have continued to aim at cryptocurrency investment vehicles, such as retirement accounts, citing the string of insolvencies witnessed last year. For example, New York Attorney General Letitia James has repeatedly called for a ban on all crypto-inclusive contribution plans and IRAs.
Regulators are understandably cautious, with one Canadian teacher’s pension fund, the Ontario Teacher’s Pension Plan, taking a $95 million loss on its substantial stake in the FTX crypto exchange.
However, some prominent crypto proponents in the U.S. Senate, like Wyoming Senator Cynthia Lummis, believe that Bitcoin should be a part of 401(k) retirement packages.
Are crypto retirement funds a good idea?
To better understand whether including cryptocurrencies in pension funds makes investment sense, Cointelegraph reached out to Ilan Sterk, CEO of Altshuler Shaham Horizon — an Israeli cryptocurrency custody and trading provider — one of the few crypto firms in the country approved to deal with banks.
According to Sterk, minimal exposure to digital assets can be a good fit for long-term retirement-centric investments. He added, “For pensioners, an investment portfolio can be allocated between various assets like securities, bonds, hedge funds, digital assets and private equity. Blockchain and digital assets are considered a relatively new field but with high utilization and a wide ecosystem, so allocating a conservative portion to such investments might be fruitful.”
