The 401(k) employee-sponsored investment scheme is one of the most popular retirement plans in the US. As of 2024, 401(k) plans held<\/a> $8.9 trillion in assets. As such, it would represent a huge source of demand for cryptocurrencies and could send prices skyrocketing.<\/p>\n Crypto traders may see the move as a bullish signal for further price spikes, but financial professionals and market observers say there are significant risks.\u00a0<\/p>\n Trump\u2019s order opens up avenues of investment that were previously locked out of America\u2019s most popular retirement plan, directing the US Labor Department to reevaluate restrictions on six different asset groups:<\/p>\n Private equity<\/p>\n Real estate (including debt instruments secured by real estate)<\/p>\n Crypto investment products that are actively managed<\/p>\n Commodities<\/p>\n Projects financing infrastructure development<\/p>\n Longevity risk-sharing pools.<\/p>\n Industry observers have claimed that more capital coming into crypto markets will drive crypto prices upward. Andr\u00e9 Dragosch, head of European research at crypto asset manager Bitwise, told Cointelegraph in a \u201cChain Reaction\u201d show on X that this could see Bitcoin\u2019s price pass $200,000<\/a> by the end of the year.<\/p>\n Is Bitcoin Headed for a 2025 Peak? Or is the 4-Year Cycle Dead? https:\/\/t.co\/DckFjvkJIx<\/a><\/p>\n \u2014 Cointelegraph (@Cointelegraph) August 18, 2025<\/a><\/p>\n CJ Burnett, chief revenue officer of Compass Mining, told Cointelegraph, \u201cIncreased adoption of Bitcoin in 401(k)s unlocks a large pool of capital and passive investment flows that drive stability and reduce volatility of the asset.\u201d<\/p>\n A 401(k) is an employer-sponsored retirement savings plan in the US that allows employees to contribute part of their income, often matched in part by an employer, to be invested in various funds. 401(k)s are often tax-deferred or tax-advantaged.<\/p>\n 401(k)s may be good for crypto, but financial professionals aren\u2019t as certain whether crypto will be good for 401(k)s.<\/p>\n One issue that concerned observers was the high fees associated with some of these alternative investments. According to the Investment Company Institute (ICI), most 401(k) plan assets have fees averaging just 0.26%, while private equity generally uses a \u201c2 and 20\u201d structure, wherein managers collect<\/a> a 2% overall fee and 20% of any returns.\u00a0<\/p>\n Philitsa Hanson, head of product, equity and fund administration at Allvue Systems, said, \u201cI don\u2019t think people are talking enough about the potential for higher fees.\u201d<\/p>\n The executive order \u201craises more questions than answers,\u201d Hanson continued. \u201cSomeone will need to be very thoughtful about how these types of assets can be incorporated.\u201d<\/p>\n Bitcoin (BTC<\/a>) exchange-traded funds (ETFs) generally enjoy fees comparable to the ICI average, although some major outliers, such as ProShares Bitcoin Strategy ETF, Valkyrie Bitcoin and Ether Strategy ETF and Grayscale Bitcoin Trust ETF, have fees of 0.95%, 1.24% and 1.50%, respectively. Fees also do not include other aspects affecting profitability, like liquidity and trading costs.<\/p>\n Related: Michigan pension fund deepens Bitcoin exposure with $11M stake in ARK ETF<\/a><\/p>\n Ary Rosenbaum of the Rosenbaum law firm wrote<\/a> that Bitcoin is far too volatile to be included in a 401(k): \u201cWhen Bitcoin drops 40% in a week \u2014 and it will \u2014 plaintiffs\u2019 attorneys will come knocking. \u2018Why did you offer such a risky asset?\u2019 \u2018What due diligence did you perform?\u2019 \u2018Where was the risk disclosure?\u2019\u201d\u00a0<\/p>\n He called crypto a \u201cfiduciary minefield.\u201d It contains complex mechanisms like staking, forks and air drops and has complex tax treatment. \u201cSuddenly you\u2019ve built a participant education nightmare.\u201d<\/p>\n Margaret Rosenfeld, chief legal officer of staking provider Everstake, told Cointelegraph, \u201cThe biggest risks are familiar ones for any investments: market volatility, cybersecurity, and fiduciary exposure.\u201d<\/p>\n \u201cThat said, these risks aren\u2019t insurmountable.\u201d\u00a0401(k) plans need \u201cplumbing upgrade\u201d<\/p>\n Rosenfeld said that updates to regulations and guidance around 401(k)s could alleviate many of the associated risks. Firstly, she suggested creating a clear standard for what could be considered a \u201cprudent\u201d digital asset.<\/p>\n She said that the Employee Retirement Income Security Act of 1974, which regulates what ought to be included in retirement plans, \u201cwas built for stocks and bonds, not blockchains.\u201d<\/p>\n Rosenfeld recommended an \u201cupgrade to the retirement system\u2019s plumbing,\u201d stating, \u201cThe recordkeeping systems that power 401(k)s aren\u2019t designed for forks, airdrops or real-time volatility. We need digital asset-ready platforms that track every onchain event automatically.\u201d\u00a0<\/p>\n She also said that regulators should define benchmarks for liquidity, transparent pricing, custody and cybersecurity to ensure that certain digital assets are \u201cretirement-ready,\u201d including independent risk ratings.\u00a0<\/p>\n \u201cManaged properly, crypto in 401(k)s could diversify retirement portfolios and bring greater transparency to a space that has often operated outside institutional oversight,\u201d Rosenfeld said.<\/p>\n But much is contingent on crypto being managed properly. Rosenbaum wrote that crypto can be a valuable addition to a retirement portfolio, as it provides diversification, a hedge against inflation and \u201cexposure to financial innovation.\u201d Still, it doesn\u2019t belong in a 401(k).<\/p>\n \u201cUse a brokerage account. Use a Roth IRA with a self-directed option. Use your discretionary income. But don\u2019t use the plan designed to be the financial lifeline for someone\u2019s retirement,\u201d he said.<\/p>\n Rosenbaum wrote that, as things stand, crypto is not a viable asset for 401(k)s. \u201cIt\u2019s a shiny object, and chasing it puts participants \u2014 and sponsors \u2014 at unnecessary risk. A conservative 1%\u20135% allocation doesn\u2019t fix the fundamental issue: volatility and complexity don\u2019t mix with retirement plans.\u201d<\/p>\n The Trump administration\u2019s move to loosen requirements on 401(k)s repeats a pattern in recent lawmaking wherein user protection<\/a> and systemic risks<\/a> take a back seat<\/a> to boost crypto adoption and the digital asset industry. The integration of crypto into the traditional financial system hasn\u2019t been stress-tested, and the results are unpredictable.\u00a0<\/p>\n![](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/0198d1df-4ca1-733a-b997-a30f4ab3bf99.png\" "\\"\\"\/")
The executive order became effective on Aug. 7. Source: White House<\/a>What risks does Bitcoin pose for 401(k) investors?<\/p>\n![](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/08\/0198d1df-50f4-7c07-ace5-bbd2a5997ade.jpeg\" "\\"\\"\/")
Mutual funds still make up most 401(k) plans, but other assets are gaining popularity.\u00a0<\/p>\n