President Trump’s move to allow crypto in 401(k)s opens a potential $9 trillion pool, setting the stage for gradual but consequential institutional adoption.
Summary
- President Trump has directed regulators to open 401(k) plans to crypto, a move that could connect trillions in retirement savings to digital assets.
- U.S. regulators have been instructed to ease rules so plan sponsors can consider crypto in 401(k) menus, pending clear guidance on fiduciary responsibilities.
- The administration’s policy shift could bring Bitcoin ETFs and similar products into retirement plans, marking a notable step in crypto’s institutional acceptance.
- The change could align the $9 trillion 401(k) market with a $4 trillion crypto market, creating new opportunities and considerations for investors.
The order that opens 401(k)s to crypto
President Donald Trump signed an executive order on Aug. 7 directing the Department of Labor, the Securities and Exchange Commission, and the Treasury Department to expand access to alternative assets in employer 401(k) plans, explicitly including crypto alongside private equity and real estate.
The White House published a fact sheet and the order the same day, describing the move as a way to broaden access to assets that have rarely appeared in defined-contribution plans.
News reports said the order asks regulators to update rules and clarify fiduciary duties and liability, so employers and plan providers can consider adding crypto exposure while meeting their obligation to act in savers’ best interests.
If plan menus begin to include approved crypto vehicles, managers that already run crypto ETFs, such as BlackRock and Fidelity, could benefit.
Investment Company Institute data show employer defined-contribution plans held about $12.2 trillion as of Mar. 31, with roughly $8.7 to $8.9 trillion in 401(k)s.
The entire crypto market is about $4 trillion by recent estimates, so the potential pool in 401(k)s is a little more than twice the size of today’s crypto market.
During Trump’s prior term, the Labor Department allowed limited private-equity exposure inside professionally managed products, but adoption was light because of litigation risk.
The new order aims to lower that risk by asking agencies to clarify the rules and reduce barriers to inclusion. If plan providers opt in, that could speed the use of already-approved wrappers such as spot Bitcoin ETFs inside 401(k) structures.
401(k)s explained and where crypto fits
A 401(k) is an employer-sponsored retirement plan that lets workers invest part of their paycheck, often with an employer match. It is the backbone of private-sector retirement savings in the U.S. by both size and participation.
The Investment Company Institute estimates more than 715,000 active 401(k) plans serve about 70 million active participants, with many former employees and retirees still invested.
Rollovers from workplace plans also feed the IRA market, which held about $15.2 trillion at the end of 2024. In that sense, the 401(k) system is not just a savings vehicle but a gateway to the wider retirement market.
Contributions follow IRS limits that reset each year. For 2025, employees can defer up to $23,500 from salary. Workers age 50 and older can add a $7,500 catch-up, and those aged 60 to 63 may have access to a larger $11,250 catch-up if the plan allows.
The combined cap for employee and employer contributions is $70,000, subject to plan rules and testing.
This scale now intersects directly with crypto. How crypto would appear in accounts depends on plan design.
Most dollars sit in professionally managed default funds, especially target-date funds. In the large EBRI/ICI database, these funds held about 38% of assets and were used by about 68% of participants.
If large managers add a rules-based crypto sleeve inside these multi-asset defaults after rulemaking, adoption could rise quickly because defaults capture most new contributions.
Before that, the nearer-term route is through products sponsors can already add, such as spot Bitcoin ETFs. These can appear as a listed option on the plan menu or through self-directed brokerage windows where the plan offers them.
A brokerage window is an optional feature that lets participants buy a wider set of securities. It is not universal and usage is modest, but a meaningful minority of plans offer it, creating an immediate technical path for ETF access.
Participant behavior and savings rates can amplify even small allocations. Fidelity reports the total 401(k) savings rate reached a record 14.3% in Q1 2025, combining a 9.5% employee deferral and a 4.8% employer contribution.
With roughly $9 trillion in 401(k)s and crypto’s market value near $4 trillion, even a 1% to 2% allocation adopted over time would create a steady bid for the asset class, especially if defaults or widely offered ETFs are the vehicle.
Forthcoming Labor and SEC guidance should clarify how sponsors can use existing “wrappers” such as ETFs, and what documentation is required for a prudent process.
Pros and cons of crypto in 401(k)
The order links 401(k) menus to an SEC-approved crypto wrapper that already exists.
U.S. spot Bitcoin ETFs offer daily pricing and exchange liquidity at a fee of around 0.25%. The largest fund, BlackRock’s IBIT, holds about 700,000 Bitcoin.
That mix of scale, transparency, and low cost gives plan sponsors something familiar to evaluate instead of bespoke crypto products.
Institutionalization is the larger goal. BlackRock has told investors that a small Bitcoin allocation can be considered, typically capped near 2%.
Mainstream research over the last two years has treated crypto as a potential diversifier, with correlations to stocks and bonds that are not consistently high. Even if plans start small, this treats crypto as a normal portfolio choice rather than an exception.
However, risks are real. Bitcoin’s major bear markets have seen peak-to-trough declines of roughly 70% to 80%, including in 2021 to 2022, which conflicts with retirement defaults that aim for steady compounding.
Fees, liquidity, and legal exposure also matter. Reuters has noted a fee gap between typical 401(k) mutual funds at about 0.26% and many alternative structures, along with concerns about liquidity, pricing transparency, and litigation risk highlighted by past cases such as Intel’s.
The order opens the door, but sponsors will still want clear ERISA guidance, the federal law that governs retirement plans, before moving beyond optional access.
What’s next?
In the short term, the order appears to have nudged fund flows. CoinShares’ latest weekly report shows a choppy week that ended with net inflows after the policy news, led by Ethereum ETFs, with Bitcoin turning positive again.
A second near-term effect is liquidity. U.S. spot Bitcoin ETFs set new subscription records in July, and futures open interest hit an all-time high. That points to more active buyers and sellers and to narrower bid-ask spreads across major venues.
Over the medium term, bringing 401(k) plans into the mix would expand the investor base beyond traders and crypto native firms. That usually improves price discovery and narrows spreads, especially as derivatives markets deepen.
At the same time, ETFs can amplify selling during stress if redemptions spike, so plan design and investor education will matter as access grows.
In the long run, the theme is institutionalization. CME’s crypto contracts continue to set activity records, and U.S. exchanges report strong crypto volumes alongside traditional products.
As retirement channels normalize crypto exposure, the asset class will likely react more to big picture forces like economic cycles, index flows, and interest rate expectations, and less to crypto-specific news.
That shift tends to lower peak volatility over multi-year periods and tie returns more closely to global risk conditions.
Over time, retirement access can harden the market’s institutional core, improving market quality while adding a new, rules-driven source of demand and, during stress, potential selling.
