A growing interest in the use of cryptocurrency, its range of digital assets, and blockchain technologies, in benefit plans and generally, gives rise to a host of questions and complex legal considerations seeing that there are both unknown risks and appealing incentives. As with any new developing terrain, the parameters around the use of cryptocurrency and blockchain continues to take shape through legislative and regulatory actions and, in the same vain, the lack thereof.
As companies turn to Groom for support to determine whether and how to use digital assets, particularly as plan investments, in compensation arrangements, and generally how to structure new products, our attorneys are forging new pathways. Our seasoned professionals are helping clients to identify how these technologies may fit into their business objectives by proactively informing them of the benefits, drawbacks, dangers, etc. Our creative and practical guidance, along with our unique capability to bridge our profound subject-matter expertise across benefits tax and fiduciary laws, helps our clients stay informed and develop innovative ways to manage their endeavors in these emerging areas.
Considering that the Employee Retirement Income Security Act of 1974 (“ERISA”) does not specify the types of investment options that can be included in a plan, cryptocurrencies are not prohibited as an investment option under ERISA. Yet, the use of cryptocurrency as a plan investment brings to the surface many tax and fiduciary implications relating to regulatory enforcement, regulatory status, securities transactions, litigation and more. This is especially true as the Department of Labor has announced its intention to investigate any retirement plan offering exposure to cryptocurrency.
Burgeoning from an abstract concept to a technology that is inevitably changing the landscape for financial institutions and retirement products, when considering the practicality of implementing blockchain technology for their businesses. We provide guidance on the implications of placing protected health information (“PHI”) or personal data on the blockchain, including compliance with the right to be forgotten afforded by some jurisdictions.
Our experience in these areas includes:
- Analyzing how to offer cryptocurrency as an IRA investment option for several major and emerging providers.
- Reviewing the fiduciary implications of permitting access to cryptocurrency through a retirement plan.
- Represent providers offering a variety of API solutions.
- Reviewing whether a particular use of blockchain is HIPAA compliant.