The US Department of Labor has proposed a rule that would make it easier for 401(k) plans to include alternative assets such as cryptocurrencies, private equity and real estate.
The proposal is a response to President Donald Trump’s executive order, issued in August, that directed the Department of Labor and the Securities and Exchange Commission to facilitate greater access to alternative assets in 401(k) plans.
“This proposed rule will show how plans can consider products that better reflect the investment landscape as it exists today,” Labor Secretary Lori Chavez-DeRemer said in a statement.
If adopted, the rule would mark a change in the way retirement plans are made. For years, most 401(k)s have focused on stocks and bonds. The new approach would allow plan providers to add a broader mix of assets, including digital tokens and private market funds that are not traded on public exchanges.
The measure is based on previous changes. Last May, the Department of Labor rescinded previous guidance that urged fiduciaries to use “extreme caution” before adding cryptocurrencies to retirement plans. Trump’s executive order went further and called for digital assets to be treated on par with other investment options.
Still, the proposal has drawn criticism from some lawmakers and financial advisers.
“As cracks appear in the private credit market, private equity returns fall to 16-year lows, and cryptocurrencies continue to decline, President Trump has decided that now is the time to include all of these risky assets in Americans’ 401(k) plans,” Senator Elizabeth Warren said in a statement. He warned that the rule could expose workers to losses while benefiting large financial companies.
The stakes for cryptocurrencies could be high. American 401(k) plans contain trillions of dollars in retirement savings, and even a small shift toward digital assets could send new capital into the market. If a large scheme with tens of thousands of workers allocated just 1% of its portfolio to bitcoin, that would translate into millions of dollars flowing into crypto funds or tokens.
