U.S. Citizens might be able to invest in Bitcoin and digital assets as part of their pension and retirement plans, according to the Retirement Savings Modernization Act. Introduced by U.S. Senators Pat Toomey, Tim Scott, and Representative Peter Meijer.

The bill was created to allow American citizens to “diversify” those assets eligible for their 401(k) plans, a retirement tool based on monthly monetary contributions, and for retirement plans. If approved, the new legislation will amend the Employee Retirement Income Security Act of 1974.

The bill would make Bitcoin and other digital assets eligible to be included in these plans. In addition, the bill contemplates the addition of the following assets and sectors to the 401(k) and pension plans, for direct or indirect investments:

  • Hedge Funds.
  • Infrastructure.
  • Private Equity.
  • Real estate or real estate-related securities.
  • Insured products and annuities.
  • Real assets.
  • Securities that are listed with the U.S. Securities and Exchange Commission (SEC).

The bill contemplates other assets and sectors. According to Senator Pat Toomey, a public defender of Bitcoin and cryptocurrencies, the bill will allow people to hedge against high inflation, and the persistent downtrend across financial markets, and protect against a potential recession. The government official added:

Our legislation will provide the millions of American savers invested in defined contribution plans with the option to enhance their retirement savings through access to the same wide range of alternative assets currently available to savers with defined benefit pension plans. This reform will open the door to higher returns and a more secure retirement for millions of Americans.

BTC’s price moving sideways on the 4-hour chart. Source: BTCUSDT Tradingview
Is Bitcoin The Best Assets To Invest In Retirement?

Data provided by the United States Senate Committee on Banking, Housing, and Urban Affairs claims that 85.5 million U.S. citizens depend and rely more on 401(k) plans as a retirement tool. In contrast, only 12.6 million use private pension plans for their long-run investments.

However, the latter outperforms the former by diversifying and adding more assets to its portfolio. In that sense, the bill aims to provide 401(k) with the capacity to expand their portfolios and provide U.S. citizens with better yield.

Based on a study published by Georgetown University, the Banking Committee argues that diversification will allow 401(k) to improve their savings by 17% each year and mitigate any potential downside pressure from financial markets. Senator Scott added:

This bill would modernize retirement plans to ensure they can provide diverse investments with higher returns. American workers and their families deserve to go about their lives with peace of mind, knowing their hard-earned money will be secure when they choose to retire.

Bitcoin and other cryptocurrencies have followed the trend in legacy financial markets losing a big percentage of the profits slated in 2020. However, the cryptocurrency remains one of the best-performing assets of the decade and a positive long-term investment, according to data from Ecoinometric.

As seen in the chart below, from 2019 to 2021, Bitcoin offered as much as 6,000% in returns to long-term investments. The monitor stated the following on Bitcoin’s cycles, as measured by the event called “Halving” that takes place every four years:

Ultimately over a halving (when the network reduces mining rewards in half) period nobody has ever lost money. Longer time horizons filter the noise.

Source: Ecoinometrics

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