Subject: Re: Trump To Allow Crypto In 401K's...
You said no bailout - and you've repeatedly in past conversations criticized the growth of existing social safety nets.

I said no bailout for people who blow their 401(k)s on crypto.
The only "Bailouts" today for 401(k)s that I'm aware of is if the program administrators screw up and don't manage the money well (fiduciary breach). I'm pretty sure that does not cover losses realized in a plan under the control of the individual investor.

Now, if some institution were to say to its investors "Put your money into this awesome crypto fund!" and they take a bunch of risk then the 2008 Supreme Court decision opens them up to a lot of liability. Hence why you don't see uber-risky investment options in most modern 401(k) plans.

If you let people take high levels of risk in their 401K, you're allowing them to privatize the risk but socialize the losses. They get more money if they win, but if they lose they add an enrollee to those social safety nets that would otherwise have had enough resources to pay for their own stuff. That's generally a bad outcome for everyone else.

This argument is basically saying that there ARE mechanisms for bailouts in the event of crazed risk. My position is to NOT socialize the loss - if someone knowingly bets their retirement on the Roulette to hit Red 11 and only Red 11 then they shouldn't be allowed to complain when the next spin shows Black 33. (Red 11 doesn't even exist on some wheels, by the way).

I'm not, either. Which is why I would prefer not to let people park 100% of their retirement savings into crypto. Because if it goes sideways on them and we don't bail them out, we're all going to have to pay more in taxes because they blew their retirement savings on a gamble.

Given the implications of the above mentioned Supreme Court case and that fact that 401(k)s are generally managed baskets of securities, I doubt we see much in the way of uber risky crypto options. The more likely case is that firms start to offer baskets of dollar-backed crypto funds or ETFs like this one:

https://etfs.grayscale.com/btc

...which have risk profiles much less spicy than just trading in raw blockchain or something.