While industry data suggests that 401(k) investment in cryptocurrency remains low, these investments are uniquely volatile and are difficult for the Labor Department to monitor, according to a just-released report by the Government Accountability Office.
"The potential for high returns can come with considerably high risk," GAO said.
Some 401(k) plans now offer the option to invest in crypto assets like bitcoin, GAO stated, and the Labor Department "still doesn't have the data to systematically measure crypto assets in 401(k) plans."
GAO said that its recommendation from 2014 "would improve the data the Department uses to identify 401(k) plans with investments in crypto assets."
Richard Neal, D-Mass., the ranking member on the House Ways and Means Committee, requested the GAO report in 2022 "as many major defined contribution plan providers announced the option to invest in cryptocurrencies" and after Labor cautioned that plan sponsors should exercise extreme care with cryptocurrency.
“Defined contribution plans are a key leg in our three-legged retirement savings system, with millions of Americans investing trillions of savings for a secure tomorrow," Neal said Wednesday in a statement.
"As markets evolve and new investing vehicles emerge, it is incumbent on the federal government to ensure proper oversight. Today’s report shows there’s more to do to protect American workers and their retirement savings from the volatile, high-risk environment that comes with cryptocurrencies," Neal said.
"The crypto market, since it began emerging as a 401(k)-investment option for some retirees and investment firms in 2022, has not been fully subjected to proper oversight and regulation," according to Neal. "As a result, as this report outlines, it has brought uniquely high risk to retirees. Americans must be confident that their investments are secure, and do not face unnecessarily high volatility, cybersecurity, and theft risk."
