US Labor Department Proposes Rule to Allow Cryptocurrency in 401(k) Retirement Plans

The US Department of Labor proposed a rule on March 30, 2026 that would make it easier for 401(k) plans to include alternative assets including cryptocurrencies, private equity, and real estate, responding to President Donald Trump’s August 2025 executive order directing regulators to expand access to digital assets in retirement portfolios.

The proposed rule establishes a safe harbor for plan fiduciaries who follow specific analytical processes when incorporating alternative assets, potentially opening trillions of dollars in retirement savings to crypto investments while drawing criticism from lawmakers who warn of heightened risks for workers.

Proposed Rule Establishes Safe Harbor for Fiduciaries Adding Alternative Assets

The Department of Labor’s proposed rule provides a framework for 401(k) plan trustees to incorporate alternative assets including cryptocurrencies, private equity, and real estate into retirement portfolios. The guidance requires fiduciaries to “objectively, thoroughly, and analytically consider” factors including performance, fees, liquidity, valuation, performance benchmarks, and complexity before adding such assets.

Trustees who abide by the specified analytical process would receive safe harbor protection from lawsuits related to alternative asset investments. The Supreme Court agreed earlier in 2026 to hear a case filed in 2019 by a former Intel employee alleging trustees made imprudent decisions by investing in hedge funds and private equity funds.

The rule follows President Trump’s August 2025 executive order directing the Labor Department and the Securities and Exchange Commission to facilitate expanded access to alternative assets in 401(k) plans. The Labor Department had previously rescinded guidance in May 2025 that urged fiduciaries to exercise “extreme care” before adding crypto to retirement plans.

Labor Secretary Lori Chavez-DeRemer stated that the proposed rule shows how plans can consider products that better reflect the investment landscape as it exists today. Treasury Secretary Scott Bessent described the proposal as an initial step aimed at being mindful of protecting retirement assets.

Industry Groups Support Expansion while Critics Warn of Risks

Alternative asset managers including Blackstone, KKR, and Apollo Global Management stand to benefit from access to 401(k) capital pools. BlackRock, which counts more than half of its $14 trillion in assets under management as linked to retirement, joined industry groups in supporting the move. Apollo CEO Marc Rowan stated that the proposed rule can meaningfully improve retirement outcomes, noting that Americans increasingly lack savings and income needed for secure retirement.

SEC Chair Paul Atkins said that Americans’ ability to participate more fully in innovation and economic growth through well-diversified long-term investments is a vitally important priority for effective retirement planning.

Senator Elizabeth Warren (D-MA) criticized the proposed rule, stating that as cracks emerge in the private credit market, private equity returns fall to 16-year lows, and crypto keeps tumbling, the administration is pushing risky assets into Americans’ 401(k)s. Warren warned the rule could expose workers to losses while benefiting large financial firms.

Some skeptics noted that the 160-page proposed rule length shows its authors wrestled with questions such as high fees. University of Texas at Austin finance professor Henry Hu stated that while the length is positive, it would have been better if they had devoted time to recent market problems with valuations and liquidity.

Potential Market Impact and Implementation Timeline

US 401(k) plans hold trillions of dollars in retirement savings, and even small allocations to digital assets could send significant new capital into crypto markets. A large plan with tens of thousands of workers allocating 1% of its portfolio to Bitcoin would translate into millions of dollars flowing into crypto funds or tokens.

The Department of Labor will open a 60-day comment period for the rule before deciding whether to finalize it. Mayer Brown partner Erin Cho noted that even if the rule is adopted, it will not open the floodgates for private equity, private credit, or crypto funds to move into the retirement space, but only provide a process for fiduciaries to follow.

HarbourVest CEO John Toomey characterized the rule as coming down to basic good practice: following the right process, having the right information, and taking decisions with the interests of individuals front and center. The proposed rule marks a shift from traditional stock-and-bond-focused 401(k) plans toward allowing plan providers to add a broader mix of assets including digital tokens and private-market funds not traded on public exchanges.

FAQ

What does the proposed Labor Department rule allow for 401(k) plans?

The proposed rule would make it easier for 401(k) plans to include alternative assets such as cryptocurrencies, private equity, and real estate. It establishes a safe harbor for plan fiduciaries who objectively and thoroughly analyze factors including performance, fees, liquidity, and complexity before adding these assets to retirement portfolios.

What prompted the proposed rule and what is the next step?

The rule responds to President Trump’s August 2025 executive order directing the Labor Department and SEC to facilitate expanded access to alternative assets in 401(k) plans. The Department of Labor will open a 60-day comment period before deciding whether to finalize the rule.

What concerns have been raised about the proposed rule?

Critics including Senator Elizabeth Warren warn that the rule could expose workers to higher risks, fees, and potential losses by allowing risky assets into retirement plans. Some skeptics note that private market funds have shown signs of strain, including withdrawals from business development companies and falling private equity returns.