The U.S. Department of Labor has proposed a new rule that would permit 401(k) retirement plans to invest in cryptocurrencies, real estate, private equity, and other alternative assets. If finalized, the regulation could open up a $10.1 trillion retirement market — a massive potential capital inflow for the crypto industry.
Trump Executive Order Takes Effect: DOL and SEC Remove Barriers
The proposal implements an executive order signed by President Donald Trump last August, which directed the Labor Department and the Securities and Exchange Commission (SEC) to eliminate legal obstacles to 401(k) investments in alternative assets. The draft rule clarifies the process plan fiduciaries must follow when considering such investments, and for the first time defines digital assets as "an emerging investment form encompassing assets that can be stored and transferred digitally, including cryptocurrencies such as Bitcoin and other tokens."
Treasury Secretary Scott Bessent said in a statement: "This proposed rule is a safe and sensible first step to implement the President's executive order. It opens the door to more diversified retirement options for millions of American workers while maintaining the highest standard of protecting retirement assets." Bessent stressed the rule does not encourage reckless bets but requires fiduciaries to make decisions through a rigorous process.
Safe Harbor for Fiduciaries: Must Evaluate Liquidity, Valuation, Complexity
The rule offers a "safe harbor" under the Employee Retirement Income Security Act (ERISA): plan fiduciaries who properly evaluate an alternative asset's performance, fees, liquidity, valuation, and product complexity would be shielded from liability. Labor Department Deputy Secretary Keith Sonderling said: "The era of the Department of Labor picking winners and losers in the market is over. Our new rule makes clear that fiduciaries must rely on a prudent process to assess any potential product."
Historically, U.S. retirement savings have been almost entirely allocated to stocks and bonds. The Labor Department acknowledged in its statement that while fiduciaries have always had the authority to consider alternatives, "in practice, almost no one has done so." The new rule aims to break this inertia — but not without pushback.
Senator Warren Hits Back: High-Volatility Assets Packed into Retirement Pockets
Senator Elizabeth Warren, a longtime crypto skeptic, sharply criticized the proposal. She argued that at a time when the private credit market shows cracks, private equity returns have hit 16-year lows, and crypto prices remain wildly volatile, the Trump administration is pushing to stuff these "high-risk assets" into everyday workers' 401(k) accounts. "This is no time to gamble with Americans' retirement savings," Warren said.
According to the Investment Company Institute, Americans held approximately $10.1 trillion in 401(k) plans as of the end of 2025, up from $9 trillion a year earlier. Even a small allocation to crypto would represent a significant sum.
The draft rule will be published in the Federal Register, followed by a 60-day public comment period. The Labor Department will then review feedback and issue a final rule; no timeline has been announced.