Why Is There Crypto In My 401(k)?

By Amanda Smith | September 9, 2025

Why Is There Crypto in My 401(k) Account? 

On August 7, 2025, President Trump issued Executive Order #14330: Democratizing Access to Alternative Assets for 401(k) Investors (the “EO”). It’s expected to impact 90 million Americans. Will it impact your credit union? 

The EO permits retirement plan fiduciaries to choose alternative assets, as described in the EO and defined below, when they deem such investments to result in “appropriate, net risk-adjusted returns” for the assets they manage. Defined benefit or pension plans are permitted to invest in alternative investments and have for decades. But defined contribution plans, such as a 401(k), have not been encouraged to do so.  

Alternative Asset Defined  

First let’s look at what kind of assets are being addressed. Alternative assets are defined in the EO as: 

  1. private market investments, including direct and indirect interests in equity, debt, or other financial instruments that are not traded on public exchanges, including those where the managers of such investments, if applicable, seek to take an active role in the management of such companies;
  2. direct and indirect interests in real estate, including debt instruments secured by direct or indirect interests in real estate;
  3. holdings in actively managed investment vehicles that are investing in digital assets;
  4. direct and indirect investments in commodities;
  5. direct and indirect interests in projects financing infrastructure development; and
  6. lifetime income investment strategies including longevity risk-sharing pools. 

What is Currently Permitted? 

Retirement funds are governed by the Employee Retirement Income Security Act, or ERISA. ERISA does not ban specific asset classes such as those laid out above. However, regulations and guidance under the Department of Labor (“DOL”) have discussed such investments. such investments.  

For purposes of selecting a defined contribution plan’s investment menu, DOL regulation § 2550.404a-1 provides that fiduciaries must consider the facts and circumstances of each investment option (including diversification, liquidity, and risk/return characteristics) and must follow a prudent process in selection and monitoring. Further, in a follow up to a 2020 Information Letter, the DOL issued a Supplement Statement on Private Equity in Defined Contribution Plan Designated Investment Alternatives that provides insight into the agency’s view. The letter stated: 

“Importantly, the Information Letter did not endorse or recommend such [private equity (PE)] investments. Rather, the Information Letter noted that PE investments tend to be more complicated, with longer time horizons, are typically less liquid, and are subject to different regulatory standards and disclosure rules than other more traditional individual account plan investment options. In addition, the Information Letter noted that the valuation of PE investments is more complex and their fees are typically higher.” 

In other words, if you want to include private equity options with your 401(k), you may need to spend more time and money to do so. 

Agency Obligations 

The EO also gives the Secretary of the Treasury 180 days from the date of the EO to examine past and present guidance regarding fiduciary duty under ERISA in connection with permitting the use of alternative assets, and specifically consider rescinding the statement made on December 21, 2021, on Supplemental Private Equity. The Secretary of the Treasury is further tasked in those 180 days to clarify the DOL’s position on alternative assets and the appropriate process to determine whether their inclusion in retirement accounts are fiduciarily responsible and must work with the SEC and other Federal regulators to consider ways to facilitate access to alternative assets. 

In accordance with the EO, on August 12, 2025, the DOL rescinded the 2021 guidance quoted above. It had previously rescinded, on May 25, 2025, guidance from 2022 that directly addressed 401(k) Plan Investments in "Cryptocurrencies", signaling a shift, even prior to the EO, that the DOL was shifting to an asset class neutral position.  

Are Financial Institutions Required to Invest in Cryptocurrency? 

You might be concerned if you provide 401(k) or other investment accounts that you will now have to deal with cryptocurrency and other assets your credit union previously had not handled. The EO does not require investment in cryptocurrencies or other alternative investments. Investment options are decided by individual employers and plan administrators, who act as fiduciaries and have the discretion to include or exclude specific assets. This EO will make choosing to invest in such assets less risky and less prone to litigation. 

Litigation 

One of the stated intents of the EO was to reduce lawsuits challenging the fiduciary wisdom of investing in alternative investments. In one such case, Anderson v. Intel Corp. Inv. Pol’y Comm., 137 F.4th 1015 (9th Cir. 2025), the 9th Circuit affirmed the dismissal of claims that the fiduciary’s inclusion of private equity in Intel Corporation’s defined contribution plan was a breach of duties of prudence and loyalty. 

The Upshot 

What does all this mean for you? The rescission of guidance is important to note, as is the movement of enforcement to an asset class neutral position. If your credit union provides certain investment accounts, you may wish to seek advice from legal counsel experienced in ERISA plans, investments, securities or cryptocurrencies. Stay tuned for additional guidance, or rescissions, as the DOL and Securities & Exchange Commission move to enact this EO.