Trump Administration Greenlights Crypto in 401(k)s—Retirement Portfolios Just Got Riskier

In a stunning policy reversal, the former president’s team clears the way for Bitcoin and other digital assets in retirement accounts. Main Street meets the wild west—what could go wrong?

Wall Street’s favorite tax-advantaged gamble? The move opens floodgates for volatile assets in traditionally conservative portfolios. Financial advisors are already sharpening their ’I told you so’ speeches.

Bonus jab: Nothing says ’secure retirement’ like betting your golden years on an asset class that can swing 20% before lunch.

The Old Rule: Proceed With Caution

Back in 2022, under the Biden administration, the Labor Department told plan managers to think twice before touching crypto. They were worried about the usual stuff: wild price swings, scams, unpredictable regulations. And to be fair, those concerns weren’t made up. bitcoin has had its ups and downs, and the crypto world isn’t exactly known for being boring or stable.

The guidance didn’t block crypto investments outright, but it did raise a big red flag. The message was clear: if you put crypto into a retirement plan, you’d better be ready to defend it, because the government would be watching closely.

The New Rule: You Decide

Now, things are different. The Department of Labor has pulled back and said it’s not going to single out crypto anymore. Instead of warning plan sponsors not to go there, it’s leaving the decision up to them.

That doesn’t mean crypto is suddenly risk-free. It just means the federal government isn’t leaning over anyone’s shoulder anymore. If a retirement plan wants to include Bitcoin or Ethereum, that’s now between the plan’s fiduciaries and their participants.

The only rule that still stands is the basic one under ERISA: do what’s best for the people in the plan. Make smart decisions. Minimize unnecessary risks. But how you interpret that is up to you.

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Part of a Bigger Crypto Pivot

This change didn’t come out of nowhere. It’s part of a wider shift under Trump’s leadership, where crypto is being treated less like a threat and more like a serious part of the financial system.

Trump has started accepting crypto for campaign donations. He’s suggested creating a national reserve of digital assets. And his media company recently made headlines for exploring a multi-billion-dollar Bitcoin strategy. Taken together, it’s pretty clear his team sees crypto as more than just internet money.

Don’t Get Too Comfortable

That said, this doesn’t mean every 401(k) plan is about to start offering crypto. Most plan sponsors are still cautious, and for good reason. Crypto is still volatile. It’s still hard to value. And it comes with unique challenges like custody and security.

Financial planners usually recommend keeping any crypto exposure small, maybe just a sliver of your total retirement savings. Something like 1 to 3 percent, depending on your risk tolerance.

What It Means for You

If you’re someone who wants to see crypto in your retirement plan, this is a step in that direction. It won’t happen overnight, but at least now, the federal government isn’t making it harder than it needs to be.

And if you’re more cautious? Nothing’s changed there either. You can still stick to what you know. Stocks, bonds, mutual funds, they’re all still on the menu.

What’s changed is that crypto just got a seat at the table.

Key Takeaways

• The U.S. Department of Labor has dropped its previous crypto warning, allowing 401(k) plans to include Bitcoin and other digital assets.
• This marks a shift from earlier guidance that discouraged plan sponsors from offering crypto due to volatility and regulatory uncertainty.
• The change aligns with the Trump team’s broader pro-crypto pivot, including campaign donations and proposals for a national digital reserve.
• While crypto is now permitted, plan fiduciaries must still act in participants’ best interests and manage risk under ERISA guidelines.
• Most retirement plans are likely to remain cautious, but this policy change opens the door for future crypto adoption in 401(k) accounts.