401(k) Embraces Crypto: Broadening Investment Access or Endangering Retirement Funds?

Robert Kiyosaki, the author of Rich Dad Poor Dad, has drawn attention to President Donald Trump’s executive order on August 7, which aims to expand alternative assets within 401(k) plans—a move that could offer notable advantages to

investors. The directive instructs federal agencies to update rules under the Employee Retirement Income Security Act (ERISA), opening the door for 401(k) account holders to invest in cryptocurrencies, private equity, and real estate. This development aligns with Trump’s larger vision of establishing the United States as the “crypto capital of the world,” a strategy reflected in recent legislative measures and regulatory easing.

This executive action overturns earlier guidance from the Biden administration’s Department of Labor (DOL), which had previously urged “extreme care” when considering digital assets for retirement plans due to their volatility and associated risks. On May 28, 2025, the DOL withdrew its 2022 advisory and adopted a neutral position, now allowing fiduciaries to assess crypto assets based on standard ERISA criteria. This policy update follows moves by the Securities and Exchange Commission (SEC), which has recently dismissed lawsuits against major cryptocurrency companies and begun discussions with industry leaders. By removing regulatory obstacles, the Labor Department’s revised stance could speed up the inclusion of Bitcoin and similar assets in retirement savings portfolios.

Proponents of these changes believe that incorporating cryptocurrencies into 401(k)s makes high-potential investments more accessible to individual savers rather than just institutional players. For example, Michigan’s largest public retirement fund currently has $44 million invested in Bitcoin and $30 million in

ETFs, illustrating that alternative investments can deliver significant gains—although they make up less than 1% of the fund’s $115 billion total assets. Advocates such as Elizabeth Hansson from Stand with Crypto note that the executive order is “permissive, not prescriptive,” meaning that employers can choose whether to offer crypto options based on their workforce’s characteristics and risk preferences. Tax benefits, like tax-deferred growth in traditional 401(k)s and tax-free withdrawals from Roth accounts, add further appeal for savers.

On the other hand, detractors caution that these new options could expose less experienced investors to greater risks. Alicia Munnell, a senior adviser at Boston College’s Center for Retirement Research, has described adding Bitcoin to 401(k)s as a “terrible idea,” pointing to its speculative qualities and historically lower long-term returns compared to conventional investments. Past market data supports these worries: Bitcoin has repeatedly suffered steep declines, including an 84% loss from late 2017 to 2018. The Bipartisan Policy Center also highlights that other alternative assets now entering retirement plans, such as private equity and private credit, often involve liquidity limitations and high fees, which can diminish returns for typical investors.

The regulatory situation continues to evolve. The Labor Department, SEC, and Treasury have 180 days to clarify the rules regarding fiduciary duties and safe harbors for plan administrators. This forthcoming guidance will determine how soon employers can roll out cryptocurrency choices, with early implementation expected from tech-forward companies. In the meantime, markets have already reacted: Bitcoin rose to $117,500 shortly after the order’s announcement, up from $114,000 beforehand. Experts suggest that if just 10% of the $12.5 trillion 401(k) market were redirected into Bitcoin, the crypto sector could see an $800 billion boost, potentially pushing prices past $155,000.

As these policies take shape, the debate between risk and reward is likely to intensify. While supporters like “Bitcoin Butcher” Ronnie Bedway consider the order a key step toward widespread adoption, critics emphasize the need for careful consideration. The final impact will hinge on regulatory clarity, investor awareness, and market trends—highlighting both the transformative opportunities and the inherent unpredictability of this new era in retirement investing.

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