Crypto is headed to inclusion in retirement plans – if it can get past company plan sponsors
If you want crypto exposure in your workplace plan right now, there is a path – a narrow one.
Does cryptocurrency belong in your 401(k)? It’s a question more employers, retirement-plan sponsors and seasoned investors are wrestling with now that Washington has signaled openness to crypto and other non-traditional assets inside retirement accounts.
But your 401(k) is not a playground. It’s your primary retirement engine. With pensions largely gone and Social Security only covering part of the journey, the goal of a 401(k) is still simple: Save early; save consistently; get your employer match and let compound growth quietly do its job.
Against that backdrop, a conversation about adding speculative and illiquid assets to these plans can feel like mixing oil and water. So where are we really headed? And how soon – if ever – will retirement investors see bitcoin (BTCUSD), ethereum (ETHUSD) and other crypto next to their target-date mutual funds?
A shift in Washington – but not a green light
After issuing cautious guidance in 2022, the U.S. Department of Labor (DOL) recently revised its position on digital assets inside 401(k)s.
— May 2025: The DOL withdrew its warning urging “extreme care” around cryptocurrency investments. The department declared neutrality – “neither endorsing nor disapproving” of crypto in retirement plans.
— August 2025: A new executive order instructed the DOL to treat digital assets similarly to other investment types and revisit fiduciary standards for crypto within ERISA-governed plans.
On paper, this sounds like innovation. In practice, the move simply shifts responsibility back to employers and plan fiduciaries. And that’s where the brakes get pumped.
Crypto makes employers nervous
“The top risk concern for employers today is fiduciary liability,” says Meghan Hannon, Partner & Retirement Plan Consulting Leader at Boulay Financial Advisors in Eden Prairie, Minn. If a plan sponsor adds a hot new asset class because employees are asking for it, and those employees later experience painful losses, the sponsor could face claims that they breached their fiduciary duty.
“Crypto brings that tension into sharp focus,” Hannon notes. “It’s an asset class defined by significant volatility and regulatory uncertainty, yet participant demand continues to grow. If a sponsor bows to pressure without a fully documented process, they’re exposed.”
That’s the underlying dilemma: Employees want choice; employers want safety – and protection.
This tension isn’t new. We saw a version of it when private equity first edged toward defined-contribution plans. But crypto adds more volatility, more regulatory complexity – and far more headlines.
Retirement-industry veteran Jerry Cicalese, head of retirement at Sentinel Group in Wakefield, Mass., sees the long-term potential for crypto but urges caution.
He points to ERISA’s foundational “prudent man” standard: Fiduciaries must make decisions with the care and skill that a prudent expert would use – always in the best interest of plan participants.
That bar is high, and for good reason. The rules require:
— Documenting every step of the decision-making process.
Cicalese says the future lies not in standalone crypto options but in professionally managed accounts that incorporate a wider mix of data and personalization. Over time, he adds, such accounts could even replace target-date funds as the default investment option.
But don’t expect rapid adoption. “Crypto in core 401(k) menus are still five to 10 years away,” he predicts, citing high costs, liquidity challenges and heavy litigation risk.
Moreover, changes in a retirement plan lineup is a slow process, usually annual, sometimes requiring approval from the company’s board of directors.
There is one way to hold crypto in a 401(k)
If you want crypto exposure in your workplace plan right now, there is a path – a narrow one – through a self-directed brokerage account (SDBA).
SDBAs, such as Fidelity BrokerageLink or Schwab Personal Choice Retirement Account, allow retirement plan participants to go far beyond the plan’s core menu of index funds and target-date options. They open the door to individual stocks, thousands of mutual funds, sector ETFs, and – depending on the provider – crypto ETFs or other alternative assets.
According to PlanSponsor’s 2024 defined contribution survey, roughly 30% of all 401(k) plans now offer an SDBA; more than 55% of large plans (over $200 million in assets) include one, and all 10 of the largest S&P 500 companies offer a brokerage window.
SBDAs come with freedom – and complexity, higher fees and more personal responsibility. This is where crypto will likely live first – not in the main lineup where fiduciary exposure is high, but in the optional “choose your own adventure” lane.
The opportunity is real. The risks are too. Crypto is not for everyone. And even for seasoned investors, sizing matters.
If your plan offers a self-directed brokerage window, work with financial adviser and consider whether a 1% to 2% allocation to a mainstream bitcoin or ethereum ETF makes sense. Stick with the best-known, biggest options. These include: Fidelity Wise Origin Bitcoin Fund FBTC; Fidelity Ethereum Fund ETF FETH; iShares Bitcoin Trust ETF IBIT and Franklin Bitcoin ETF EZBC.
Think of crypto today the way investors once thought about early-stage tech stocks – innovative, exciting and potentially transformational. But also highly volatile.
If your plan doesn’t offer SDBA? No stress. Crypto is still young. The opportunities ahead – tokenization, spot ETFs, custody improvements – mean you haven’t missed the boat.
But remember, retirement investing is about discipline, not drama. Your 401(k) is still the backbone of your retirement security. Treat it with respect. Approach new asset classes with curiosity – and humility.
And when in doubt, ask the same question the best employers and retirement plan consultants are asking: “Just because we can add this, should we?”
David Conti is a financial writer and retirement coach at RetireMentors.
More: I tried to donate my crypto to charity. Here’s what I learned.
Also read: These are my biggest investing regrets – and how I’m hitting reset in retirement
-David Conti
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