Tax-deferred retirement savings accounts in the US, specifically 401(k) plans, could potentially amass a staggering $800 billion in crypto assets.

Tax-deferred retirement savings accounts in the US, specifically 401(k) plans, could potentially amass a staggering $800 billion in crypto assets.

In a recent development, Ryan Rasmussen of Bitwise has suggested that the inclusion of cryptocurrencies, particularly Bitcoin and Ethereum, in 401(k) plans could generate substantial new capital inflows. This potential shift could represent tens to hundreds of billions of dollars flowing into digital assets.

Rasmussen's forecast is based on a small allocation of 1% to 5% of 401(k) assets invested in crypto. For instance, a 1% allocation equals around $125 billion, while 3% and 5% allocations correspond to $375 billion and $625 billion respectively, assuming 401(k) assets of around $12.5 trillion.

Bitcoin and Ethereum would likely benefit most from this development, as they are accessible via exchange-traded funds (ETFs), making it easier for 401(k) plan providers to add these to their investment offerings. This inclusion could push crypto market prices higher in the short term but also create a sustained and predictable demand source over the medium to long term, as regular payroll deductions contribute to 401(k) assets.

The move signals a regulatory acceptance of cryptocurrencies within mainstream finance, which will lead to increased institutional interest and market liquidity. However, it also introduces new complexity and risks for retirement savers due to crypto's volatility and speculative nature.

The potential impact of cryptocurrencies on 401(k) plans includes:

• Massive inflows of new capital to crypto markets, possibly hundreds of billions of dollars.
• Sustained long-term demand for Bitcoin and Ethereum through systematic retirement contributions.
• Greater institutional acceptance and regulatory clarity bolstering crypto's legitimacy.
• Increased market liquidity and potentially higher crypto valuations.
• New challenges and risks in retirement portfolio management due to crypto volatility and regulatory complexities.

This reflects a transformative shift in how retirement assets might be allocated, with cryptocurrencies playing a growing role in 401(k) investment strategies.

Meanwhile, Sophia Panel, a seasoned cryptocurrency journalist with over 10 years of experience, continues to educate underserved communities about the potential of blockchain. Panel specializes in crypto content strategy, SEO, and web3 storytelling. Her expertise also includes blockchain content strategy, SEO & Web Analytics, Public Relations & Community Growth, Longform & Thought Leadership Writing. Panel has been invited as a speaker at Indian Web3 Summits and global blockchain forums.

Panel's focus on user engagement and education aligns with the growing acceptance and impact of digital assets on traditional finance and retirement planning. The potential inflow of crypto into 401(k) plans highlights this trend.

In other news, the Coincu research team suggests that increasing crypto allocations in retirement plans could drive substantial long-term market growth. Coinbase has also introduced new DEX trading features for U.S. users, while Hong Kong has limited the first stablecoin licenses to four companies.

Elsewhere, Ukraine is set to conduct a preliminary reading of a crypto regulation bill, and the FCA is planning to lift the ban on retail crypto ETNs by 2025. LayerZero acquired Stargate Bridge in a $110M proposal, and DeFi Development Corp acquired 110,466 SOL in treasury expansion.

In a separate development, Do Kwon pleaded guilty to two federal charges in the Terraform case.

[1] CryptoSlate [2] Cointelegraph [3] Decrypt [4] Forbes [5] Business Insider

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