As the U.S. Department of Labor’s proposed rule to expand the inclusion of cryptocurrencies and other alternative assets in 401(k) retirement plans has moved to the White House for final review, an analysis said altcoins other than Bitcoin and Ethereum could face relatively high barriers during the actual inclusion process.
The proposal released by the Labor Department in March does not separately limit the types of cryptocurrencies that may be included or impose a minimum market capitalization. Instead, it requires retirement plan fiduciaries to review six factors: the investment product’s performance, fees, liquidity, valuation, comparable benchmarks and complexity.
KuCoin analyzed that Bitcoin and Ethereum are likely to receive priority consideration because they have mature markets and investment products, while smaller-cap altcoins may have difficulty meeting the criteria in terms of liquidity, historical performance and securing appropriate benchmarks.
However, the proposal itself does not permit or exclude any specific cryptocurrency, and whether an individual asset is included will depend on the judgment of each 401(k) plan operator.