In brief
- The proposal implements President Trump's order last year to expand 401(k) access to alternative assets.
- Few retirement plans offer alternatives, and even fewer hold them, the Labor Department said.
- The rule clears a legal path but leaves operational hurdles and unresolved questions about demand, Decrypt was told.
The U.S. Department of Labor has released a proposed rule that would give 401(k) fiduciaries a safe harbor when considering alternative investments, including funds that invest in cryptocurrencies and other digital assets.
Under the proposal, fiduciaries that undergo review for performance, fees, liquidity, valuation, benchmarking, and complexity would get a safe harbor if they follow that process. It was released for public inspection through the Federal Register on Monday and is scheduled for formal publication by Tuesday.
The proposed rule carries out a directive from President Donald Trump in August last year to expand access to alternative assets in 401(k) plans, including investment vehicles with exposure to crypto.
Americans held roughly $10.1 trillion in 401(k) plans as of the end of 2025, part of a broader $14.2 trillion defined contribution market, according to data from the Investment Company Institute.
Drawing on older data, the Labor Department pegs the participant-directed market at $8.8 trillion across roughly 721,000 plans.
Only 4% of defined contribution plans offered alternative investments last year, with just 0.1% of assets allocated to them, per data cited in the proposal.
Safe harbor, hard choices
The proposal follows the Labor Department's decision last May to rescind Biden-era guidance that had urged fiduciaries to exercise "extreme care" before adding crypto to 401(k) menus, a standard the agency said went beyond what the federal law governing retirement plans requires.
“Retirement funds are the holy grail for bitcoin enthusiasts looking for new investors: oceans of cash, tax-advantaged,” Andrew M. Bailey, Senior Fellow at the Bitcoin Policy Institute, told Decrypt.
But retirement plans carry a built-in tension, Bailey noted.
“Their horizons—decades, not months or years, make them well-suited for long-term investment in new technologies,” he said. “Their approach to risk and tight regulations pulls them in the opposite direction.”
While risk aversion could “steer retirees away,” rule changes “that empower savers to make their own choices” would be welcome, he said.
Once the rules are settled, the harder question is whether savers will actually bite, Bailey opined.
"A secondary effect to watch is equity-based investment vehicles for bitcoin, like Strategy's preferred stock offerings," Bailey said. Whether direct 401(k) exposure would cannibalize demand for such products or prove complementary remains an open question, he noted.
The proposal places digital assets “on the same playing field” as other alternative investments, Joshua Chu, lawyer, lecturer, and co-chair of the Hong Kong Web3 Association, told Decrypt.
“If a fiduciary can document a robust process on fees, liquidity, valuation and complexity, they now have a clear safe harbor roadmap instead of a regulatory minefield,” he said.
With it, retirement savers can get “a taste of alternative-asset alpha without the plan sponsor hiding under the desk every time Bitcoin sneezes,” he added.
Still, fiduciaries would need to build “daily pricing, liquidity, and risk controls” for crypto inside 401(k) wrappers before any of it reaches a retiree's account, he added.
The proposal could put U.S. retirees ahead of most Asian savers in accessing regulated crypto exposure, Chu noted, citing how Hong Kong's pension system and China's trading ban still keep digital assets out of retirement accounts.