A firm that calls itself “the first licensed Registered Investment Advisor for Bitcoin and Digital Assets”[i] has launched what it says is the “first ERISA compliant employer-sponsored 401(k) plan with Bitcoin.”
According to a Nov. 19 press release, Newport Beach, California-based Digital Asset Investment Management (DAiM) serves as the plan fiduciary and is responsible for selecting, managing, monitoring and benchmarking the investment offerings.
Bitcoin is a digital currency created in January 2009 following the housing market crash. Like other currencies, it has an exchange rate (see below), offers the promise of lower transaction fees than traditional online payment mechanisms and is operated by a decentralized authority, unlike government-issued currencies. It is created, distributed, traded and stored with the use of a decentralized ledger system known as a blockchain.
DAiM says it executed the very first employer-sponsored 401(k) plan in October 2019—and has spent the past year “diligently testing,” allowing it to launch “scalable 401(k) plans that provide record keeping and administrative services.”
DAiM says it will serve as the 3(38) advisor and fiduciary to the plan, and that their 401(k) plan “offers several recommended model portfolios of varying risk to traditional assets and allocation of up to 10% to Bitcoin.” They go on to explain that Bitcoin will be held in Institutional Cold Storage Custody with Gemini Trust, and that, should a participant leave their company, their Bitcoin will be able to transfer with them (they also note that, “should an individual want to allocate more to Bitcoin, they can schedule an investment consultation with DAiM.”
Not the Only One
That announcement notwithstanding, earlier this year Bitwage, a bitcoin payroll provider, announced the limited launch of what they called the Bitwage Bitcoin 401(k) Plan, with itself as first customer. That platform provided the ability for a plan to allow workers to invest traditional/pre-tax and Roth/post-tax 401(k) dollars into Bitcoin—an offering specifically targeted at employers that wanted to use Paycheck Protection Program (PPP) proceeds to make 401(k) contributions.
The offering was the product of what was described as a “4-way strategic collaboration between Bitwage, Leading Retirement Solutions, Kingdom Trust and Gemini,” with Leading Retirement Solutions providing administration and recording keeping, Kingdom Trust providing custody, Gemini bringing the exchange solution, with Bitwage acting as a “concierge for the company and employees to navigate between all four companies.”
For those unfamiliar with the exchange rate of such things, the firm provides a bitcoin dollar cost average calculator at https://www.bitcoindollarcostaverage.com/.
[i] The press release notes that DAiM became the first licensed Registered Investment Advisor in May 2018, providing direct access to Bitcoin and Digital Assets in Separately Managed Brokerage accounts and IRAs.