Labor Department Proposal Could Open 401(k)s to Bitcoin and Alternative Assets

The U.S. Department of Labor has unveiled a sweeping proposed rule that could significantly expand the range of investment options available in 401(k)

Bitcoin gets exposure

The guidance could open the door for increased exposure to digital assets like Bitcoin within 401(k) plans — a development long sought by segments of the crypto industry. While plan sponsors have technically always been permitted to consider such assets, regulatory ambiguity and prior guidance had a chilling effect.

In 2022, the Biden administration issued a compliance release cautioning fiduciaries against offering cryptocurrency in retirement plans, citing volatility and investor protection concerns.

That stance is now being reversed, with Deputy Labor Secretary Keith Sonderling emphasizing neutrality. “The department’s days of picking winners and losers are over,” he said.

The proposal does not explicitly endorse crypto or any specific asset class. Instead, it establishes “safe harbor” frameworks designed to protect fiduciaries who undertake thorough due diligence when adding alternative investments to plan menus.

This process-based approach could make it easier for asset managers to introduce diversified funds that include exposure to private equity, real estate, or digital assets or Bitcoin.

Assets like Bitcoin could enhance long-term returns and provide a hedge against inflation, particularly for younger savers with longer time horizons.

The U.S. Securities and Exchange Commission and the U.S. Department of the Treasury both collaborated on the rulemaking, signaling a broader interagency effort to modernize retirement investing.