Coinbase teams Up With 401(k) provider to offer crypto investing

Yahoo Finance’s Stephanie Asymkos reports details on crypto entering the world of retirement plans.

Video transcript

ALEXIS CHRISTOFOROUS: A small group of workers will find something new in their company-sponsored retirement plans come July 1, the option to invest in cryptocurrencies. Coinbase has partnered with some 401(k) providers, and we have Yahoo Finance's Stephanie Asymkos here with the details in your Your Money report. What do you know, Steph?

STEPHANIE ASYMKOS: So this is a big deal because since the introduction of the 401(k) in the early 1980s, it's remained relatively static in its investing capabilities. So this announcement really heralds the first major change with institutional adoption of crypto as an alternative asset class. And I connected with leadership ForUsAll and Coinbase, and they're really excited about this democratization of crypto and bringing it to the masses and particularly addressing the inequalities that prevent some Americans from accessing and tapping into these alternative investments.

KRISTIN MYERS: So Stephanie, I'm curious to know how people can really protect their savings. Because usually, when you think about your 401(k) and your retirement savings, you think of them as less risky, less volatile, particularly when you get closer and closer to your retirement. But cryptocurrencies are incredibly volatile, so how does that work?

STEPHANIE ASYMKOS: It's a totally valid question, and there's really no way of getting around it. Crypto is more volatile than a traditional asset. And ForUsAll assured me that there are guardrails in place to try and prevent these disastrous negative outcomes. And there is a 5% crypto allocation, and I was told that that percentage is rooted in academic and industry research for striking that best, most prudent risk balance. So you can't go all in at 100%. You really have to keep it at 5%.

And in broader context, ForUsAll manages a relatively small piece of the country's 401(k) pie. But also, account owners and holders can expect things like education, guidance, and then automatic balance transfers will be particularly important for keeping participants and account owners apprised of crypto's volatility so they can adjust as needed.

ALEXIS CHRISTOFOROUS: All right, Stephanie Asymkos, thanks so much for the update. We appreciate it.