$10 trillion in fresh funding! The U.S. Department of Labor proposes: Allow “401(k) retirement funds” to invest in cryptocurrencies

The U.S. Department of Labor has recently proposed relaxing existing rules to allow 401(k) retirement accounts to invest in alternative assets such as cryptocurrencies, real estate, private equity, and more. If formally approved, the policy would open a gateway for the cryptocurrency industry to the $10.1 trillion retirement market. This proposal is intended to carry out an executive order signed by U.S. President Donald Trump last August. At the time, Trump instructed the Department of Labor and the U.S. Securities and Exchange Commission (SEC) to work together to remove regulatory obstacles and pave the way for expanding 401(k) investments into alternative assets. The U.S. Department of Labor has provided detailed guidance on the procedures that 401(k) plan managers should follow when considering including alternative assets in an investment portfolio. In addition, the draft explicitly defines digital assets as “a type of emerging investment that covers various assets that can be stored and transmitted digitally, including cryptocurrencies such as Bitcoin and other tokens.” U.S. Treasury Secretary Scott Bessent said in a statement: “This proposed rule is the first step in implementing the president’s executive order in a safe and prudent manner. We will open the door to millions of American workers—while upholding the highest principle of protecting retirement assets—and provide more diversified retirement investment options.” For a long time, U.S. pension funds have been nearly entirely invested in traditional stocks and bonds. In its statement, the Department of Labor acknowledged that while retirement plan managers have long had the authority to consider including alternative assets, “in practice, almost nobody does.” If the new rules ultimately take effect smoothly, they will provide a “safe harbor” mechanism for retirement plans governed by the Employee Retirement Income Security Act (ERISA). Going forward, before managers can include emerging assets, they must prudently evaluate performance, fees, liquidity, valuation, and product complexity as required by regulations. U.S. Deputy Secretary of Labor Keith Sonderling noted: “The era of the Department of Labor helping the market ‘pick winners and losers’ has ended. Our new rules make it clear that managers must use a prudent process to evaluate any potential product offerings.” This proposal could open up a huge potential market for cryptocurrencies. According to data from the Investment Company Institute, as of the end of 2025, Americans held about $10.1 trillion in assets in 401(k) plans, up from $9 trillion a year earlier. In other words, even if only a small portion of funds flows into the cryptocurrency market, it would still be an enormous figure. However, this policy has also drawn skepticism from some politicians. Senator Elizabeth Warren, who has long been highly cautious about cryptocurrencies, believes this could expose people’s retirement savings to risk: “Right now, as cracks begin to appear in the private credit market, private equity returns have fallen to a 16-year low, and cryptocurrency prices continue to swing wildly, President Trump somehow thinks it’s a good time to cram these ‘high-risk assets’ into Americans’ 401(k) accounts.”