Why You Should Be Cautious About Cryptocurrency as an Alternative Investment Option

In March 2021, Bitcoin’s value surpassed over 1 trillion dollars.

Cryptocurrency like Bitcoin has been a much more discussed and sought-after commodity in the recent years and has been discussed at great length by financial analysts. Cryptocurrency and other alternative investments have provided diversification to portfolio options and has increased the engagement of younger people with their 401(k)s. With the convergence of these two security positions, 401k’s are now adding a plan option that will allow participants to allocate assets and contributions with the ability to trade digital currencies.

There is cause to be cautious of this new investment type. The main concern with crypto is that they are volatile in nature and can create a potential risk for the participants. Plan advisors are apprehensive to get on board because it could contradict their fiduciary duty to their clients.

Jamie Greenleaf, Principal and Lead Advisor of Cafaro Greenleaf — A OneDigital Company was quoted in the Investment News article entitled, "401(k) provider adds brokerage-window-style access to crypto," to discuss her thoughts on cryptocurrency.

I am in wait-and-see mode. It is not something that I would be comfortable with as a fiduciary on a plan. Most participants are savers not investors but have been made to become investors through the [qualified default investment options]. We also have an obligation to protect from large losses … It is always about weighing the risks, and to me currently it is not worth the risk."
-  Jamie Greenleaf, Principal and Lead Advisor, Cafaro Greenleaf — A OneDigital Company

Read the Investment News article, here. 

Want to learn more about Jamie Greenleaf? Check out this latest news feature: Jamie Greenleaf Named One of 2020’s Top Women in Benefit Advising.