Power Corp. of Canada’s online financial-services company Wealthsimple is adding retirement portfolios that include Bitcoin and Ethereum for its group-retirement clients, another sign of the possible mainstreaming of cryptocurrencies. 

Employees of companies with retirement plans run by Wealthsimple Work will be able to allocate 1 per cent to 3 per cent of their holdings into exchange-traded funds made up of Bitcoin and Ethereum, Wealthsimple said Thursday. The plans will automatically rebalance to keep the crypto, stock and bond portions of their portfolios at their targeted levels.

For Wealthsimple, adding cryptocurrencies to retirement plans is a way to differentiate its offerings from those of other financial-services providers and lure more companies to sign up with Wealthsimple Work. The move also is meant to encourage younger employees -- who may be enthusiastic about crypto, but less interested in saving for retirement -- to start contributing to Wealthsimple Work plans.

“When you’re young, that’s the best time to start saving for retirement,” Tim Kalimov, head of Wealthsimple Work, said in an interview. “So getting those folks invested is really critical.”

Wealthsimple has more than 2 million users and in May raised $750 million (US$609 million) in a funding round that valued it at about US$4 billion, more than three times what it was worth just seven months earlier. Wealthsimple Work manages group retirement plans for hundreds of companies, according to the company’s website.

The move also may provide another data point for investors seeking to gauge the potential for cryptocurrencies catching on among a wider audience. Optimism for broader crypto acceptance already was bolstered this week by Bitcoin’s rally to a record and the listing of the first exchange-traded fund linked to the digital currency. 

Meanwhile, Morgan Stanley Chief Executive Officer James Gorman said last week that he doesn’t think crypto is a fad, pitting him against JPMorgan Chase & Co. CEO Jamie Dimon, who said days earlier that he personally thinks Bitcoin is “worthless” though some of his clients disagree. Former Goldman Sachs Group Inc. CEO Lloyd Blankfein said crypto “may be one of the thousand things that I never in a million years thought would work, and it may work.”

“It’s clearly a part of the cultural conversation,” Kalimov said. “There is a potential that cryptocurrencies and the blockchain technology that underpins them are really transformational, and that’s where the excitement in the market is coming from.”
As for critics who may question the suitability of Bitcoin and Ethereum for retirement plans, Wealthsimple Chief Investment Officer Ben Reeves said reasonable investors can disagree on whether cryptocurrencies are overvalued or whether they’ll increase in value and become a key feature for the next generation of internet companies. Either way, they represent a unique asset class, distinct from other currencies, that employees may want exposure to in their retirement plans, he said.

“A bet on cryptocurrency is a bet that this is a framework that’s going to be used for the next generation of companies, that it’s a new and emerging distributed store of value, and there’s a strong investment-appreciation thesis for it,” Reeves said, noting that he isn’t necessarily endorsing that view. “Whereas a currency is more going to be a zero-sum game used as a pretty well-established store of value and means of exchange.”