Coinbase is teaming up with Forusall to launch an alternative 401k plan that offers in-plan cryptocurrency access. The plan will officially launch in July.
The deal brings cryptocurrencies a step closer to mass adoption
ForUsAll Inc, a 401k provider, announced earlier this month a partnership with the institutional arm of Coinbase Global Inc that will allow employees in its plans to invest up to 5% of their 401k contributions in Bitcoin, Ethereum, Litecoin and other cryptocurrencies.
With just $1.7 billion in retirement assets, ForUsAll represents a small portion of the $22 trillion retirement account market. But the deal opens a door to a new use case for cryptocurrencies and is one step closer to mass adoption.
The head of Coinbase’s institutional crypto arm, Brett Tejpaul, said during Forusall’s alt 401 k announcement that the expansion of digital assets into mainstream retirement plans will broaden the playing field. “When we created our institutional platform, our initial focus was making cryptocurrency accessible to institutional investors and high-net-worth individuals,” Tejpaul remarked. “The next evolution is to broaden our reach, and we are thrilled to be working with Forusall, the leading 401k technology platform, to expand access to cryptocurrency through 401ks.”
Participants get notified when their crypto investments exceed 5% of the balance
The company plans to notify participants when the value of their crypto investments exceeds 5% of the balance and ask them to sell some crypto and transfer the profits into stocks and bonds. If the balance in crypto holdings exceeds 5% of a portfolio’s value, an employee would no longer be allowed to transfer more of his or her current balance into it, although current contributions can continue.
Forusall’s alt 401k option isn’t the first retirement plan to bring crypto assets into play. U.S.-based Digital Asset Investment Management (Daim) revealed in November 2020 that it was offering a company-sponsored 401k retirement plan. Daim’s product allocates up to 10% in bitcoin via the institutional-grade custodian Gemini Trust. Gemini is also partnering with Bitwage to allow employees to invest their pre-tax and post-tax dollars in bitcoin (BTC).