The cryptocurrency is legally permissible as a 401(k) investment under ERISA, but some plan sponsors may have questions about whether it is prudent.

Bitwage launched what it touted as the “world’s first Bitcoin 401(k) plan” in May.

Bitwage provides cryptocurrency payroll and invoicing services. It says the 401(k) offering is a four-way strategic collaboration between Bitwage, Leading Retirement Solutions, Kingdom Trust and Gemini. Leading Retirement Solutions provides the administration and recordingkeeping for the 401(k) plan. Kingdom Trust is the custodian, Gemini provides a secure and compliant exchange solution and Bitwage acts as a concierge for the company and employees to navigate between all four companies.

“We have spent the past year building our solution with a flagship client and recently made it available to plan sponsors,” says Kirsten Curry, CEO and attorney at Leading Retirement Solutions in Seattle.

But what is Bitcoin anyway? Bitcoin is the first implementation of a concept called “cryptocurrency,” or a virtual or digital currency. In simple terms, each bitcoin is a computer file stored in a “digital wallet” application on a smartphone or computer. People can send bitcoins to another digital wallet, and every transaction is recorded in a public list called the blockchain. Some people, called miners, lend their computing power to verify other users’ transactions, so that the same bitcoin isn’t spent twice. In return, they receive new bitcoins.

People like Bitcoin because it is decentralized—not controlled by any bank or government—and is fully transparent. And bitcoins can be used to buy things. Since the cryptocurrency was created in 2009, a number of major companies accept bitcoin as payment, according to several websites, including Microsoft, Overstock and many BMW dealerships in the United States and United Kingdom.

But some people like to trade or mine bitcoin in hopes the currency will increase in value. Kingdom Trust CEO Ryan Radloff calls bitcoin “the digital Millennials’ version of the gold bug in the 1970s.” “Soon after that [rush], gold was introduced as an investment in retirement accounts,” he says. “Investors now have the same continued frustration with government control over currency and the lack of transparency.” Though Bitcoin is not controlled by the government, the IRS has issued guidance telling taxpayers that income from virtual currency transactions is reportable on their income tax returns. The IRS treats virtual currency as property.

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