The U.S. Department of Labor on Monday published a proposed regulation aimed at giving 401(k) participants access to alternative investments, including crypto assets like Bitcoin (BTC).
The Employee Benefits Security Administration (EBSA) described the rule as “historic” and said it outlines a clear, process-driven framework for fiduciaries to follow when evaluating non-traditional assets for defined contribution plans.
Safe Harbor Rules for 401(k) Regarding Crypto
In the heart of the proposal are safe harbor procedures designed to guide plan administrators in the selection of appropriate investment alternatives.
Under the rule, fiduciaries should evaluate potential alternatives, taking into account factors such as expected performance, fees, liquidity, valuation methods, appropriate performance benchmarks and the complexity of the crypto assets.
The department emphasized that the rule is intentionally neutral with respect to asset classes: it does not endorse any specific type investment but instead, a cautious process for assessment and selection is described.
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The move follows President Trump’s executive order, “Democratizing Access to Alternative Assets for 401(k) Investors,” and represents an effort to translate that directive into practical regulatory guidance, the statement on the matter said.
Labor Department officials say the proposed rule returns the agency to a longstanding approach that focuses on… fiduciary process rather than picking winners and losers among asset types.
“The days of the department picking winners and losers are over. Our rule clearly requires managers to evaluate each potential product offering by following a prudent process,” said Deputy Secretary of Labor Keith Sonderling.
Treasury and SEC Return Labor Proposal
EBSA noted that the Biden administration’s 2022 compliance guidance – which effectively discouraged fiduciaries from offering crypto options – deviated from the requirements of the Employee Retirement Income Security Act (ERISA), contributing to the limited adoption of alternatives in retirement plans.
The new proposal aims to eliminate this regulatory uncertainty by providing concrete, process-based protections to fiduciaries who choose to consider crypto investments. Officials from other agencies welcomed the initiative as part of a broader push to expand retirement investment options.
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Treasury Secretary Scott Bessent praised the Labor Department’s regulations as “another step in ushering in President Trump’s Golden Age,” saying the proposal aims to broaden access to supplemental retirement options for “millions of Americans” while protecting retirement assets.
Securities and Exchange Commission (SEC) Chairman Paul Atkins also expressed his support, noting that it allows Americans to participate innovation and economic growth through diversified long-term investments is important for retirement planning and that the SEC helped formulate the proposal.
If finalized, the rule would provide fiduciaries with a structured path to consider cryptocurrencies and other alternative assets without immediately exposing them to the compliance risks that had discouraged inclusion in recent years.
At the time of writing, Bitcoin was trading at $66,580, having failed to capitalize on moves slightly above $68,000 earlier on Monday.
Featured image from OpenArt, chart from TradingView.com