White House records show the rule remains under review, with no legally mandated completion deadline. Its final text has not been published, meaning the precise requirements could differ from the Labor Department’s March proposal.
What Does the Proposed 401(k) Rule Change?
The Labor Department’s March 2026 proposal established a process-based fiduciary framework intended to make alternative investments easier for employers to consider without automatically exposing them to greater legal liability.
Under the proposed safe harbor, plan managers would need to objectively and thoroughly assess six factors when selecting investments: performance, fees, liquidity, valuation, performance benchmarks and complexity.
The framework does not identify specific cryptocurrencies, establish minimum market capitalization thresholds or require retirement plans to offer digital assets. Instead, it focuses on whether fiduciaries can demonstrate that their investment selection process satisfies the prudence requirements of the Employee Retirement Income Security Act.
Following the prescribed process could provide a presumption of reasonable fiduciary judgment in litigation. However, the proposed protection would not prevent lawsuits or eliminate employers’ obligations to act in participants’ interests.
The rule follows a broader policy change that began in May 2025, when the Labor Department rescinded its 2022 guidance urging extreme caution over cryptocurrency investments in retirement plans. The department subsequently returned to an investment-neutral approach rather than endorsing or rejecting particular asset classes.
Investor Takeaway
The proposed rule could reduce legal barriers to crypto investment options, but employer-level fiduciary decisions will determine whether retirement savers gain access.
Why Could Smaller Cryptocurrencies Struggle to Qualify?
Bitcoin and Ether are expected to have an advantage because of their established trading markets, longer investment histories and availability through regulated exchange-traded products.
Teresa Goody Guillén, managing partner at Bellementis PLLC, argued that token size alone should not determine eligibility. Instead, fiduciaries must assess whether an investment meets appropriate standards for liquidity, valuation and investor protection.
Smaller cryptocurrencies may struggle with those requirements. Limited historical performance makes long-term risk-adjusted return estimates harder to support, while thin trading markets can complicate liquidation and pricing during market stress.
Benchmarking presents another obstacle. Plan managers need credible reference measures to evaluate whether a proposed investment offers reasonable expected returns relative to its risks and expenses. Many newer tokens lack established benchmarks or a sufficiently long market history.
Bernardo Brites, co-founder and CEO of Trace Finance, expects Bitcoin and Ether to meet these tests more readily than smaller cryptocurrencies, particularly because institutional investment products provide established pricing and custody arrangements.
Nevertheless, the proposed framework does not automatically exclude altcoins. A smaller token could potentially qualify if a fiduciary can document appropriate liquidity, pricing reliability, investment rationale and risk controls.
Why Are Crypto ETFs More Likely to Come First?
Exchange-traded funds and professionally managed products offer a more practical route into workplace retirement plans than direct cryptocurrency ownership.
These instruments can fit existing brokerage, custody and retirement recordkeeping systems, reducing the need for employers to establish cryptocurrency wallets, manage private keys or develop specialized cybersecurity arrangements.
Morgan Stanley’s expansion of cryptocurrency fund access to retirement-account clients illustrates how traditional financial institutions are incorporating Bitcoin and Ether exposure through established investment products.
Direct cryptocurrency holdings, by comparison, introduce additional operational responsibilities involving safekeeping, transaction settlement, cybersecurity and valuation.
However, an ETF structure does not remove the underlying asset’s volatility or guarantee suitability for retirement savings. Fiduciaries must still assess fees, trading liquidity, portfolio concentration and the investment’s role within a long-term retirement strategy.
Investor Takeaway
Bitcoin and Ether ETFs have an operational advantage over smaller tokens, but broader retirement-plan adoption depends on fiduciary approval and investment-platform support.
What Could Delay Crypto Adoption in Retirement Plans?
Regulatory approval would address only one obstacle. Employers, plan administrators and investment providers would still need to decide whether adding cryptocurrency exposure is commercially practical and appropriate for participants.
Legal uncertainty is another consideration. The proposed safe harbor may strengthen defenses against claims of imprudent investment selection, but courts would still evaluate whether fiduciaries followed a reasonable process. Future administrations could also revise the regulatory framework.
The durability of the policy has already attracted congressional attention. In September 2025, nine US lawmakers urged the SEC to help implement the administration’s 401(k) cryptocurrency initiative, seeking coordinated regulatory changes to expand retirement investment options.
Analysts expect adoption to develop gradually, with existing brokerage arrangements and Bitcoin and Ether funds potentially preceding broader cryptocurrency offerings. However, there is no confirmed implementation schedule requiring employers to introduce these products.
For cryptocurrency markets, the size of the US retirement system makes the regulatory development commercially relevant, but potential inflows cannot be treated as guaranteed demand. The immediate question is whether the final rule preserves the proposed fiduciary protections and how employers apply them when assessing individual digital assets.
