6 Things Investors Need to Know Before They Add Cryptocurrency to Their 401(k)

The Trump administration just issued an executive order that could change how you invest for retirement. If the order clears the usual regulatory hurdles and takes effect, you may have access to a broader range of investment options in that all-important 401(k) plan. The options might even include cryptocurrencies — kinda, sorta.

Here’s what crypto investors need to know about the as-yet numberless executive order titled “Democratizing Access to Alternative Assets for 401(K) Investors.” This document looks simple at first glance, but it has a few important twists.

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1. Retirement plans for diamond hands?

Finally, you might be able to explain to your financial advisor why you need “digital assets” in your 401(k) retirement plan with a straight face. The executive order specifically calls out “holdings in actively managed investment vehicles that are investing in digital assets” as a new asset class that can be offered in tax-efficient 401(k) plans.

That’s government-speak for “crypto funds are on the menu,” but it’s not a strict order to serve up Bitcoin (BTC 0.49%) and Ethereum (ETH 5.99%) alternatives right away. The order simply gives investment management firms the option to consider digital assets for their clients.

2. Plot twist: Crypto is just one item on a bigger menu

This executive order isn’t just about Bitcoin or about cryptocurrencies in general. It also opens the door for 401(k) plans to offer lots of other asset classes that used to be out of bounds. Besides the long-awaited cryptocurrencies, you might see real estate parcels, ownership in private companies, or various commodities in next year’s retirement plan options.

Yes, crypto is a crucial element of this expansion, but it’s also just a small piece of a much larger puzzle. The Trump administration wants to give 401(k) management firms the ability to invest in lots of nontraditional markets.

3. Lawsuit protection is a big deal

The order literally blames “opportunistic trial lawyers” for keeping crypto out of your 401(k). Apparently, plan administrators have been too scared of getting sued to let you bet your retirement savings on digital assets. The administration wants to create “safe harbors” for trading crypto (and other unusual asset classes). This is basically legal bubble wrap for companies brave enough to offer crypto options, reducing their fear of legal setbacks.

4. Timeline: This mission launches in roughly T-minus 180 days

The Department of Labor has six months to figure out how to make this happen without causing a retirement apocalypse. The Securities and Exchange Commission (SEC) is also being asked to reconsider who counts as an “accredited investor” — potentially letting more regular folks access these investment types.

Mark your calendars for February 2026. That’s when the executive order could take effect, assuming it survives the usual battery of congressional reviews and legal challenges. Those old checks and balances are still in play, after all.

5. Reality check: Your boss’s 401(k) plan still has to opt in

This isn’t a mandate — it’s more like the government saying, “Hey, we won’t be mad if you want to add crypto to 401(k)s.” Your employer’s plan administrator still needs to make the decision to offer cryptocurrencies. And they still have to act as fiduciaries with your best interests at heart, which means they can’t just let you bet the farm on Dogecoin because Elon tweeted something bullish.

6. The fine print nobody wants to read

The order acknowledges these investments might come with “potentially higher expenses.” In other words, crypto fund management fees might eat into your gains, like transaction fees on Ethereum during peak congestion.

And your fund manager won’t be buying cryptocurrencies directly anyhow. Remember this quote from the first point: “Holdings in actively managed investment vehicles that are investing in digital assets.” That snippet describes something closer to a Bitcoin or Ethereum-based exchange-traded fund (ETF) than a mandate to open crypto-trading accounts.

So if your 401(k) plan manager opts in to the new digital asset class, it would probably be via high-quality funds such as the iShares Bitcoin Trust (IBIT 0.48%) and the Fidelity Ethereum Fund (FETH 6.13%). It’s an extra layer of investor protection, but also another source of potentially expensive management fees.

All in all, this order may be a positive event for crypto investors. The final outcome depends on how the legislative forces manage and interpret the document.

Come February, individual investors might have better access to alternative investments (including crypto), and the entire class of 401(k) fund managers could pour trillions of dollars into formerly forbidden investment ideas. It remains to be seen how this affects cryptocurrencies in general, but it’s absolutely more of a bullish move than a bearish challenge.