Pension funds often feature smaller alternative asset allocations and deep liquidity to mitigate risk, Allie Itami told Cointelegraph.
State pension plans have an easier time allocating a portion of their assets to cryptocurrencies than private pension plans, which must adhere to fiduciary regulations under the Employee Retirement Income Security Act of 1974 (ERISA), attorney Allie Itami of Lathrop GPM told Cointelegraph.
According to Itami, the Employee Benefits Security Administration (EBSA), which enforces the ERISA regulations, cited the nascent and volatile nature of cryptocurrencies as the primary reason for cautioning against private pension plans investing in digital assets. Itami explained:
This strict enforcement of ERISA regulations and the ensuing fiduciary liability placed on private pension managers means that capital inflows into the crypto markets from retirement investment accounts will likely continue to be dominated by state pension plans until the guidance is reversed.
