U.S. legislators are urging the Securities and Exchange Commission (SEC) to act swiftly in facilitating access to cryptocurrency investments within 401(k) retirement plans. A bipartisan group of nine lawmakers has approached SEC Chair Paul Atkins, requesting his assistance in advancing the regulatory framework necessary to include digital assets in these long-term investment vehicles.
In a recent official letter, the lawmakers—including House Financial Services Committee Chairman French Hill and Subcommittee on Capital Markets Chairman Ann Wagner—stressed the importance of providing clear guidance to the Department of Labor. They urged SEC Chair Atkins to assist in revising regulations and offering clarity so that crypto could be more easily included in employer-sponsored retirement plans.
The initiative aligns with President Donald Trump’s August Executive Order (EO) on “Democratizing Access to Alternative Assets for 401(k) Investors,” which directed the SEC to explore ways to broaden the range of alternative assets—such as cryptocurrencies—accessible to retirement savers. The lawmakers expressed hope that opening the door to crypto investments would benefit the 90 million Americans currently restricted from such opportunities, potentially enhancing their retirement security.
This push follows the reversal of the Department of Labor’s guidance in May, which previously advised fiduciaries to exercise extreme caution when considering cryptocurrencies in retirement plans. The new stance suggests a more open approach, allowing for the possibility that cryptocurrencies could serve as a legitimate component of diversified investment strategies.
“Every American saving for retirement should have the opportunity to include alternative assets if it aligns with their risk profile and fiduciary standards,” the lawmakers stated, citing support from figures such as Frank D. Lucas, Warren Davidson, and others. They believe that modest allocations to crypto—potentially around 1%—could significantly increase the flow of capital into digital assets, with estimates suggesting around $93 billion could be invested into the $9.3 trillion US 401(k) market.
A small percentage could translate into substantial crypto inflows
Implementing the EO’s directives could unlock billions of dollars flowing into cryptocurrency markets through retirement funds. Even a 1% allocation might bring in nearly $93 billion, vastly exceeding the $60.6 billion attracted to Bitcoin-based ETFs since their launch earlier this year.
Some public pension funds are already taking steps into crypto
Several state-level pension funds have begun to diversify into digital assets. The Michigan Retirement System notably increased its holdings, purchasing $10.7 million worth of the ARK 21Shares Bitcoin ETF during the second quarter and holding substantial investments in Ethereum-based trusts. Conversely, the Wisconsin Investment Board liquidated its holdings in BlackRock’s Bitcoin ETF in early 2023, reflecting varying approaches among public funds regarding crypto exposure.
As regulatory clarity improves, the potential for mainstream adoption of cryptocurrency in retirement plans continues to grow, promising to reshape the landscape of crypto markets, ETFs, and DeFi products designed for long-term investors.
