A proposed US Labor Department rule designed to facilitate the inclusion of alternative investments, including cryptocurrencies, in 401(k) retirement plans has reached the White House for final review. The Office of Information and Regulatory Affairs confirmed the rule’s status on Thursday.
The regulation aims to provide clearer legal protections for employers and plan managers who choose to offer these assets. However, the proposal does not explicitly specify which digital assets qualify for inclusion, nor does it establish a minimum market capitalization requirement.
Fiduciary guidelines
Instead of a strict whitelist, the Labor Department’s March proposal guides retirement plan managers to evaluate investments based on six key factors: performance, fees, liquidity, valuation, benchmarks, and complexity. This framework places the burden of due diligence on plan committees.
Teresa Goody Guillén, managing partner at Bellementis PLLC, stated that Bitcoin and Ether are likely to be the first cryptocurrencies offered due to their established markets. As of November 6, Bitcoin held a market capitalization of approximately $1.5 trillion, while Ether stood at roughly $273 billion, according to CoinGecko data.
Guillén noted that smaller altcoins are not automatically excluded. Plan managers would need to demonstrate that their investment choices are sensible, a standard that may prove difficult for less established assets to meet.
Implementation timeline
Bernardo Brites, co-founder and CEO of Trace Finance, argued that most tokens beyond Bitcoin and Ether would fail fiduciary standards before market capitalization is considered. He cited track record and benchmark availability as primary hurdles.
Experts indicated that exchange-traded funds (ETFs) and managed funds will likely be offered before direct crypto holdings, as these products align more easily with existing custody systems. Brites projected that some crypto investment options could become available in 2027, with wider adoption by 2028.
Brites noted that the White House review process can take up to ninety days, followed by publication and an effective date typically sixty days later. He warned that future administrations could reverse the rule, citing the reversal of 2022 guidance in 2025 as a precedent for regulatory volatility.
