SEC, FINRA Double Down on Warning of Retirement Account Crypto Risk

US financial regulators on Tuesday highlighted crypto as a risky asset in self-directed IRAs that may lack proper disclosures and ample liquidity

article-image

TierneyMJ/Shutterstock.com modified by Blockworks

share

US regulators have reiterated warnings on their perceived risks of adding cryptocurrencies to retirement accounts. 

The SEC and the Financial Industry Regulatory Authority (FINRA) on Tuesday again cautioned investors allocating to alternative assets in self-directed individual retirement accounts (IRAs), highlighting crypto as a risk.

“Crypto assets may be securities that are offered without SEC registration or a valid exemption from registration, and may not be accompanied by complete or accurate information to aid investors in making informed decisions,” regulators wrote.

In making their case against crypto, regulators additionally alluded to liquidity concerns centered around digital assets. 

Many crypto trading platforms brand their entities as “exchanges” — which could contribute to incorrect investor impressions that those market makers have registered with the SEC, the warning said. 

Crypto exposures in retirement accounts has been a touchy subject of late. That’s in part due to the underperformance of Grayscale Bitcoin Trust (GBTC), as well as write-offs by pension funds invested in failed crypto firms Celsius and FTX.

Read More: Your recap on all things GBTC as takeover attempts mount

Tuesday’s regulatory guidance focuses on self-directed IRAs, plans that allow investment in more assets than other types of IRAs — such as real estate, private placement securities, precious metals and other commodities. These differ from 401(k) plans, which are employer-sponsored retirement savings plans that give employees a choice of investment options, typically mutual funds. 

But warnings about crypto investments have not been isolated to the self-directed retirement space. 

The Department of Labor said in March 2022 guidelines that the Employee Benefits Security Administration (EBSA) expects to investigate 401(k) plans that offer participant investments in cryptocurrencies and related products. 

Those guidelines have “chilled interest” by plan sponsors and fiduciaries in direct crypto investments for the time being, Castle Funds Director Dan Hoover told Blockworks last week. 

Still, Fidelity said last April that the financial services company would give employers the option to offer bitcoin exposure to employees in their core 401(k) investment lineup. A Fidelity previously said it was set to launch its first plan sponsor clients by the end of 2022. 

The company had $9.6 trillion in assets under administration, as of Sept. 30, and manages employee benefit programs for nearly 23,000 businesses. 

A Fidelity spokesperson did not immediately comment on the demand for crypto exposure in retirement portfolios in the wake of FTX’s crash in November, which shook the industry.

“We are proud of the Digital Assets Account as a responsible solution to meet the demands of mainstream interest,” a firm representative told Blockworks in October. “In fact, client interest has not only been strong, but also spans across a wide range of industries and company sizes.”

Senators, including Elizabeth Warren, D-Mass., have repeatedly urged Fidelity — as recently as November — to stop its 401(k) sponsor partners from offering bitcoin exposure.

Fidelity has said it engages in “ongoing dialogue with regulators and policymakers” to ensure consumer protections and educational guidance for plan sponsors.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

    Upcoming Events

    Javits Center North | 445 11th Ave

    Tues - Thurs, March 18 - 20, 2025

    Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

    Brooklyn, NY

    TUES - THURS, JUNE 24 - 26, 2025

    Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

    recent research

    Unlocked Advisory-min.png

    Research

    This report distills Blockworks Advisory’s research on incentive programs and their analysis, offering a foundation for designing future initiatives and advancing industry-wide standards. By highlighting key lessons and methodologies, we aim to empower protocols to make informed, data-driven decisions.

    article-image

    Many analysts expected bitcoin to top $100K before year-end, though it’s been on a post-election tear

    article-image

    Will investors take a 10% lower return to get access to a regulated investment wrapper?

    article-image

    Brian Armstrong called out the hire of Gurbir Grewal, who had been the SEC’s enforcement division director since 2021

    article-image

    Certain senators will be interested to learn about Atkins’s private sector business interests, specifically those related to crypto

    article-image

    Innovative smart debt and collateral features are fueling Fluid’s rise to $1.2 billion TVL, reshaping the Instadapp brand

    article-image

    Crypto’s liquidity engine is now worth over $300 billion