90 Million Americans Could Soon Invest in Bitcoin via 401(k)s

The U.S. Securities and Exchange Commission (SEC) faces mounting pressure to implement regulatory changes allowing Bitcoin and other alternative assets in 401(k) retirement plans, following President Donald Trump’s executive order signed on August 7, 2025. The directive tasks the SEC, the Department of Labor (DOL), and the Treasury with updating regulations to facilitate access to cryptocurrency, private equity, and real estate investments in retirement accountstitle5^[5]. This move aligns with broader efforts to expand investment options for everyday savers, with lawmakers emphasizing the need to democratize access to assets previously reserved for institutional investorstitle6^[6].

The executive order reverses earlier caution from the DOL, which in 2022 issued guidance warning against cryptocurrency in 401(k)s due to volatility and custodial riskstitle2^[2]. The updated approach adopts a “facts-and-circumstances” standard, restoring fiduciary discretion to evaluate alternative assets like Bitcoin ETFs. This shift is supported by recent SEC actions, including the Spring 2025 regulatory agenda, which prioritizes clarifying rules for crypto assets and reducing compliance burdenstitle3^[3]. The SEC is also considering revising accredited investor definitions to broaden participation, as outlined in bipartisan legislation advancing in Congresstitle6^[6].

Industry stakeholders highlight the potential scale of the opportunity. With $12.5 trillion in U.S. 401(k) savings, even a small allocation to Bitcoin could inject billions into the crypto market. For instance, if Bitcoin captures 10% of the $8 trillion 401(k) market, it could add up to $800 billion, potentially pushing the cryptocurrency’s price above $155,000 per cointitle5^[5]. Michigan’s public pension system, which holds $74 million in Bitcoin and Ethereum ETFs, illustrates how institutional investors are already allocating to crypto, albeit cautiouslytitle1^[1].

However, risks and challenges remain. Critics, including Alicia Munnell of Boston College, argue that Bitcoin’s volatility and complexity make it unsuitable for most 401(k) participantstitle1^[1]. Regulatory frameworks must address high fees, custodial safeguards, and investor education to mitigate risks for retirees. The DOL has signaled plans to issue safe harbor provisions by early 2026, offering guidance to protect fiduciaries who meet due diligence standards.

Lawmakers, including House Financial Services Committee Chair French Hill and Rep. Warren Davidson, urge swift action to finalize rules. They stress that 90 million Americans are currently restricted from alternative investments, limiting their ability to hedge against inflation or diversify portfoliostitle6^[6]. Meanwhile, market participants like Galaxy Digital’s Mike Novogratz view the order as a “monster pool of capital” for Bitcoin, with prices surging post-announcementtitle5^[5].

Adoption timelines remain uncertain. While some employers may act quickly, particularly those catering to younger, tech-savvy workforces, widespread integration is likely to take years. The DOL’s 180-day deadline for regulatory updates and the need for compliant products and employer plan revisions suggest gradual implementationtitle1^[1]. For now, self-directed brokerage windows in 401(k)s and IRAs already allow limited crypto exposure, with ETFs like iShares Bitcoin Trust (IBIT) and VanEck Ethereum ETF (ETHV) gaining tractiontitle4^[4].

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