US Labor Department Proposes Allowing Cryptocurrencies in 401(k) Retirement Plans to Implement Trump Executive Order
The U.S. Department of Labor has unveiled a proposed regulation aimed at expanding the range of investment options available within 401(k) retirement plans to include alternative assets such as cryptocurrencies, private equity, and real estate. This significant move marks a major step toward putting into effect an executive order issued by former President Donald Trump in August 2025, which directed federal agencies to facilitate broader access to alternative investment vehicles within retirement accounts.
Details of the Proposed Rule
The draft rule provides guidelines for 401(k) plan fiduciaries on how to prudently evaluate and incorporate alternative assets into retirement portfolios. Notably, the proposal explicitly defines digital assets as “a new form of investing that includes a wide variety of assets that can be stored and transmitted digitally, including cryptocurrencies such as bitcoin and other tokens.”
Under the proposed regulation, retirement plan managers would have a safe harbor under the Employee Retirement Income Security Act (ERISA) when determining whether to add alternative assets. They would be required to conduct a thorough, prudent assessment considering factors such as performance history, fees, liquidity, valuation, and complexity of these investments before including them.
Deputy Secretary of Labor Keith Sonderling commented, “The department’s days of picking winners and losers are over. Our rule clearly spells out that managers must evaluate any and all potential product offerings by following a prudent process.”
Context and Reaction
This initiative follows Trump’s executive order directing the Labor Department to pave the way for alternative assets in retirement plans and calling on the Securities and Exchange Commission (SEC) to revise regulations to facilitate this change. Treasury Secretary Scott Bessent remarked in a statement, “This proposed rule is an initial step in implementing the President’s Executive Order in a safe and smart manner, broadening access to additional retirement plan options for millions of Americans while being mindful of the importance of protecting retirement assets.”
Although plan managers have historically been authorized to invest in alternative assets, the Labor Department noted that “almost none have done so,” primarily due to regulatory uncertainty and prudent investment considerations.
The proposal opens a sizeable market potential, as Americans held approximately $10.1 trillion in 401(k) plans at the end of 2025, up from $9 trillion the previous year, according to data from the Investment Company Institute.
Not all responses have been positive. Senator Elizabeth Warren criticized the proposal, warning it could expose retirement savings to undue risk. She stated, “As cracks emerge in private credit, private equity returns fall to 16-year lows, and crypto keeps tumbling, Trump has decided now is the time to stick these risky assets into Americans’ 401(k)s.”
Next Steps
The Labor Department will invite public comments on the proposed rule for a 60-day period following its publication in the Federal Register. Stakeholders, including plan managers, investors, and advocacy groups, will have the opportunity to weigh in before the rule is finalized.
This development reflects the evolving landscape of retirement investing and regulatory approaches to digital assets. Should this rule take effect, it would represent one of the clearest signals yet from U.S. regulators embracing cryptocurrencies as a legitimate asset class for long-term retirement savings.
Disclosure: This article is based on reporting by The Block. The Block operates independently and provides news, research, and data on the cryptocurrency industry. As of 2023, Foresight Ventures is a majority investor in The Block, and also invests in other crypto-related companies.