An asset manager based in the United States, DAiM, which is known as Digital Asset Investment Management, has launched an employer-sponsored 401(k) retirement plan that supports Bitcoin. This is the first ever Bitcoin retirement plan sponsored by a company to be introduced on U.S. soil. On November 19th, 2020, the asset manager made the announcement and stated that it would be serving as an advisor and a fiduciary when it comes to assisting companies in coming up with their own 401(k) plans. As a matter of fact, DAiM has offered its assistance in developing plans that provide a variety of recommended model portfolios of different level of risks.
These plans can be tied up to traditional assets and would also have around 10% Bitcoin allocated within it. The BTC that will be part of these plans will be kept in cold storage by the Gemini Trust. By doing so, DAiM will be able to transfer the Bitcoin to any former-employees as well because they don’t have to be working at participating companies in order to get access to it. However, it should be noted that the crypto friendly plans that are being introduced by DAiM are still compliant with the 1974 Employee Retirement Income Security Act.
Moreover, employers will be able to offer these plans to their employees from the beginning of 2021. Citizens of the United States had been able to include their crypto assets in their individual retirement accounts, respective 401(k) rollover accounts and brokerage accounts. This had become possible since 2018 because that’s when taxation had become applicable on Bitcoin, as per the rules of the Internal Revenue Service (IRS). The chief operating officer of DAiM, Adam Pokernicky, also made a statement about the entire matter. He elaborated that incorporating Bitcoin into company-based retirement plans hadn’t been possible up till now.
He went on to explain that it was possible to convert an old 401(k) plan to an IRA when someone leaves a job or an employer and can invest in Bitcoin from there. However, until recently, the only way they could invest in Bitcoin while working at a company was to take a severe penalty or to quit your job altogether. Pokernicky also went on to say that traditional wealth management industries always have had a difficult time when it comes to warming up to Bitcoin and the crypto market as a whole. He also highlighted that in these current times, there weren’t many investment advisors to be found, who could offer licensed and regulated access to Bitcoin directly to brokerage and retirement accounts.
As far as the reluctance of the sector is concerned, the COO said that it was mostly because of the huge regulatory red tap that’s applicable in the United States, when it comes to the matter of crypto compliance. In order to prove his point, he said that it had taken slow-building for a full year for DAiM to be able to get the right approvals in order to offer this new service.