Indiana Requires Crypto Investment Access for State DC Plans

Indiana is the first state to require some state-run public defined contribution plans to offer investments in cryptocurrency. Governor Mike Braun signed House Bill 1042 into law Tuesday. The law set July 1, 2027 as the deadline for the state plans to offer self-directed brokerage accounts with at least one cryptocurrency investment option. 

The affected plans are Hoosier START, or the state’s public employees’ deferred compensation plan, which offers 457(b) and 401(a) plans; the state legislators’ defined contribution plan; and other retirement funds and accounts for “specified” public employees and teachers.

The new law, House Act 1042, also prevents state agencies, other than the Indiana Department of Financial Institutions, from prohibiting or limiting the use of digital assets as payment, and prevents outlawing or restricting digital asset mining businesses.

Tom Perkins, investment counsel and director of the Indiana Public Retirement System, which runs the state’s pensions, testified before a state Senate Finance Committee hearing last month that his organization had worked with the state house on the bill, and he was “more or less happy” with it.

State Representative Kyle Pierce, a Republican, said in a statement when he introduced the bill in December that it would give “more investment choices while establishing guardrails.” His bill follows a general political push to emphasize the ability to invest in alternative assets, in line with President Donald Trump’s August executive order encouraging 401(k) plans’ investment in private assets.

Indiana’s law is “unusual” for giving investment requirements for the brokerage window, from the perspective of Matt Petersen, executive director of the National Association of Government Defined Contribution Administrators, who said that could also limit the law’s impact.

“About 1% of all money is in the [brokerage] window, so I don’t expect this one to have much of an effect,” Petersen says.

Anthony Randazzo, founder and CEO of the Equable Institute, a nonprofit that studies public pensions, also says that Indiana’s law is “curious” for focusing on mandating an asset class that was not explicitly outlawed, but he also expects other states could follow the Hoosier state’s lead with copycat bills.

“The nature of a law that mandates a niche asset class, not just that it can be considered, but that it has to be made available, is almost by its nature political, because it is stepping … into the fiduciary oversight process,” Randazzo says.