- Proposed rule allows 401(k) plans to include cryptocurrencies and alternative assets
- Follows Trump’s executive order to expand retirement investment options
- Includes guidance on risk assessment, fees, liquidity, and valuation
- Could open access to a $10.1 trillion retirement market
- 60-day public comment period to follow publication
Labor Department Proposal Expands 401(k) Investment Scope
The U.S. Department of Labor has introduced a proposed rule that would allow 401(k) retirement plans to include alternative assets such as cryptocurrencies, private equity, and real estate. The move is part of efforts to implement an executive order signed by President Donald Trump.
The proposal defines digital assets as a new form of investment that includes cryptocurrencies like bitcoin and other digitally stored and transferable tokens. It also outlines steps that plan managers must follow when considering such assets for retirement portfolios. The rule emphasizes that plan managers must evaluate factors such as performance, fees, liquidity, valuation, and complexity before including alternative investments.
Implementation of Executive Order and Regulatory Coordination
The proposed regulation follows an executive order issued in August directing the Labor Department to facilitate access to alternative assets in retirement plans. The order also called on the Securities and Exchange Commission to revise regulations or guidance to support this objective.
Treasury Secretary Scott Bessent stated that the proposal represents an initial step toward expanding retirement plan options while maintaining safeguards to protect retirement assets. Deputy Secretary of Labor Keith Sonderling noted that the rule aims to ensure a consistent evaluation process, stating that plan managers must assess all potential investment options through a prudent framework.
Market Impact and Industry Response
The proposal could significantly expand access to cryptocurrencies by opening the 401(k) market, which held approximately $10.1 trillion in assets at the end of 2025, according to the Investment Company Institute. The Labor Department noted that while plan managers have historically had the authority to consider alternative assets, very few have done so. The proposed rule would provide a safe harbor under the Employee Retirement Income Security Act for those who choose to include such investments.
However, the proposal has drawn criticism. Senator Elizabeth Warren stated that including alternative assets such as crypto could expose retirement savings to higher risks, citing recent trends in private credit, private equity, and cryptocurrency markets. The agency will open a 60-day public comment period after the proposal is published in the Federal Register.
