By Danielle Walker, in Advisor Perspectives, featuring Brian Spinelli, CFP®, AIF®, Co-Chief Investment Officer
The views presented here do not necessarily represent those of Advisor Perspectives.
A recently passed law in Indiana now requires some state retirement plans to allow participants to invest in cryptocurrency, setting the stage for broader crypto adoption by public funds.
Gov. Mike Braun signed House Bill 1042 into law on March 3, mandating certain public employee retirement funds, teachers retirement plans, defined contribution and deferred compensation plans to offer self-directed brokerage accounts with at least one crypto investment option by July 1, 2027.
Brian Spinelli, co-CIO of Halbert Hargrove, shared that while the law expands access to crypto for some individuals, it also provides new protections for plan administrators.
“My take on it is, the law is just making it accessible to have a digital or crypto asset option in 401(k) investment options. Whereas right now, no one would probably put that in their options because they are worried about getting sued,” Spinelli said.
He added that the average plan participant may not even be aware that crypto is an investment choice.
“Most people are using target date funds,” Spinelli said. “The law was probably trying to make it available so that the people who were responsible for managing the plan had a little more protection,” he said.
Here To Stay — But With Some Reservations
Since crypto assets are riskier investments, Spinelli said that financial advisors should be open to learning more about them, yet cautious when helping clients to gain exposure — whether through a retirement account or otherwise.
“I know you have these camps of, ‘I hate crypto’ and ‘I love crypto,’” with each coming in and out of favor throughout different cycles, he said. “I don’t think either of them is right. You need to be open minded to it. That doesn’t mean that every client can tolerate it.”
His view on crypto? “It’s here to stay, [so] how do we deal with it?”
Before the passage of the Indiana law, the crypto legislation met some resistance from lawmakers. Of note, Rep. Ed DeLaney offered amendments for the house bill, which were ultimately defeated.
Rep. DeLaney offered the amendments to “protect the pension funds of state employees from high-risk investment decisions,” he said in a January statement.
“It is fiscally irresponsible to allow state pension funds to be opened up to such risk simply because we want to send a message that the Indiana House of Representatives is supportive of the crypto industry,” he said. “If state funds are invested in cryptocurrency and that investment goes bad, the state still has an obligation to pay for those pensions. The taxpayers of Indiana could be on the hook because the legislature wants to jump headfirst into something new and risky.”
For advisors who are transitioning to running their own advisory practice, and trying to stay up to speed on fast-changing crypto markets and regulations, Spinelli at Halbert Hargrove recommends continued education.
He and other financial professionals at Halbert Hargrove have tapped the Digital Assets Council of Financial Professionals (DACFP) as an educational resource on cryptocurrency investing, he shared.
Spinelli received a certificate in blockchain and digital assets through DACFP around four years ago.
“I’ve sent a number of our financial professionals (to DACFP) because crypto was not a native concept to them,” he said, noting that the council offers free toolkits as well.
If clients end up gaining exposure to crypto, Spinelli recommended these assets be treated like longer-term investments.
“If they are going to go into something like this, it is really a long-term asset. The horizon for it needs to be very similar to how you invest in stocks. It’s not a 12-month thing. You buy it and hold on to it. It’ll test your patience,” Spinelli said, adding that he’d generally recommend holding crypto investments for at least five years.
“A 1% to 2% allocation of a total portfolio is probably where you can start,” Spinelli said. “It won’t bury someone if 1% of their portfolio doesn’t work. For advisors who are just getting into this, 1% to 2% is enough, and maybe you can build up over time.”
Digital Asset Framework
In March, law firm Sheppard published additional insights on the Indiana law — and how it fits within the broader push for digital asset adoption.
“States are increasingly addressing digital assets through legislation that both enables use cases and limits regulatory fragmentation,” said a blog post co-written by Sheppard partner A.J. S. Dhaliwal, special counsel Mehul N. Madia and associate Maxwell Earp-Thomas.
“Indiana’s framework aligns with this trend by protecting core blockchain activities while centralizing oversight within designated financial regulators. As legislative activity continues to expand across jurisdictions, businesses should monitor developments and update compliance and operational strategies as necessary,” the co-authors wrote.
“The legislation defines ‘cryptocurrency’ as a decentralized virtual currency that uses encryption to validate transactions and control supply, while excluding payment stablecoins. It also adopts a broad definition of ‘digital asset,’ capturing a range of blockchain-based instruments,” the law firm shared.
