Crypto ETFs edge toward access as Indiana HB 1042 advances

Indiana HB 1042: Self-directed brokerage accounts, not pension direct crypto

Indiana’s HB 1042 advanced from a Senate committee with amendments that narrow its scope: it does not authorize the state to invest defined benefit pension assets directly in cryptocurrency or cryptocurrency ETFs. Instead, the bill focuses on permitting access to such products through self-directed brokerage accounts available to certain defined contribution participants, as reported by Indiana Capital Chronicle.

Earlier drafts contemplated broader pension exposure, but committee changes removed those provisions. The bill’s author, Rep. Kyle Pierce, has positioned the measure as optional access, while Committee Chair Sen. Scott Baldwin steered amendments reflecting greater caution.

Immediate impact on INPRS and cryptocurrency ETFs access

Practically, the Indiana Public Retirement System (INPRS) would not allocate defined benefit assets to crypto under HB 1042 as amended. For employees in defined contribution plans that offer a self-directed brokerage window, access to cryptocurrency ETFs could occur only if their chosen brokerage lists such funds and the plan allows a brokerage account.

The bill does not mandate inclusion of any specific ETF or require INPRS to add brokerage windows. A self-directed brokerage account routes investment decisions and risk to the individual participant, distinct from the pooled, fiduciary-managed approach used in defined benefit pensions.

Committee testimony and institutional feedback emphasized caution and optionality. “We’ve worked with the House to get it to the current form and (we’re) more or less happy with it,” said Tom Perkins, Investments Counsel and Director of Investment Stewardship at the Indiana Public Retirement System.

Reflecting market concerns, Sen. Scott Baldwin, who chairs the committee, said the product “is not doing extremely well,” underscoring why direct pension allocations were pared back.

Key risks, regulatory context, and next steps to watch

Volatility, custody, liquidity, SEC/DoL context for retirement plans

Key risks for any retirement-plan crypto exposure include price volatility, fund and market liquidity under stress, and the mechanics of custody. An analysis by AInvest’s Julian West adds potential regulatory misalignment with Securities and Exchange Commission guidance for retirement investments, and highlights liquidity and custody considerations for crypto ETFs and stablecoins.

Federal oversight remains a material factor: investor-protection standards from the SEC and fiduciary review in the Department of Labor context imply heightened scrutiny for novel assets in retirement programs. Under HB 1042, any crypto exposure would remain participant-directed via brokerage windows, not fiduciary-selected core menus.

Committee amendments, sponsor views, INPRS stance, and bill’s next steps

After adopting committee amendments, the measure advanced with a do-pass recommendation to the full Senate, as reported by Cointelegraph. Further amendments remain possible during floor debate and conference, which could refine access mechanics or compliance language.

Rep. Kyle Pierce has framed HB 1042 as modernization and consumer choice, while keeping participation voluntary for plans and individuals. INPRS’s neutral posture and lawmakers’ caution suggest implementation, if enacted, would likely proceed through existing brokerage-window infrastructure rather than sweeping changes to pension asset allocation.

At the time of this writing, Coinbase (COIN) traded around 161.04, up 10.21% intraday, based on data from Yahoo Finance. These equity moves neither validate nor negate policy choices but provide context for concurrent market conditions.