The Trump administration is moving ahead with a regulatory effort that could widen the range of investments available in U.S. 401(k) retirement plans. The latest step sends a Labor Department proposal to the White House for review after earlier guidance laid out how plan managers should assess assets such as cryptocurrencies and private equity.
Highlights
- The U.S. Labor Department sent a proposed rule to the White House to allow 401(k) plans to include cryptocurrencies and other alternative assets.
- The proposal follows a Trump-era directive and reverses Biden-era guidance discouraging crypto, aiming to help fiduciaries balance higher costs with diversification and stronger returns.
- Policymakers like Senators Sanders and Warren oppose the rule, warning of increased investor risk, while adoption would boost access to crypto but heighten fiduciary compliance requirements.
White House review of retirement investment rule
As reported by The Block, citing the Department of Labor filing, the agency on Thursday sent a proposed rule to the White House Office of Information and Regulatory Affairs for review, a required step before federal regulations are published. The proposal is designed to advance President Donald Trump’s executive order directing the department to clear a path for alternative assets, including cryptocurrencies, in 401(k) plans.
In the filing, the department says any clarification should help fiduciaries identify the criteria needed to prudently weigh potentially higher costs against the goals of stronger long-term net returns and broader investment diversification. The department also says it is still considering the costs and benefits tied to the proposal.
This move comes months after the Labor Department unveiled an initial rule setting out steps that 401(k) plan managers should take when considering whether to add alternative assets such as digital assets and private equity to investment menus. The department had also earlier reversed Biden-era guidance that discouraged retirement managers from treating crypto as an investment option in these plans.
Political scrutiny and market implications
The proposal is drawing scrutiny on Capitol Hill as policymakers debate whether retirement savers should be exposed to more volatile assets. Earlier this year, Senators Bernie Sanders and Elizabeth Warren urged the Labor Department to scrap the rule, arguing that it could leave investors vulnerable to swings in assets including crypto.
For the retirement and digital asset sectors, the rulemaking process marks another sign that Washington is reconsidering how alternative investments fit into mainstream savings products. If adopted, the change could expand access to crypto through employer-sponsored retirement plans while increasing compliance and due-diligence demands on plan fiduciaries.
Our earlier article on the Philippine Social Security System’s investment performance explained how the state pension fund defended its long-term, diversified equity strategy amid scrutiny over paper losses. It emphasized the distinction between unrealized declines and actual cash losses, pointing to decades of realized gains and steady dividend income as evidence of disciplined risk management for members’ contributions.
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