Bitcoin News Today: Retirement Portfolios Face New Risk as Crypto Enters 401(k)s

President Trump signed an executive order on August 7, 2025, that allows cryptocurrencies, including Bitcoin, to be included in U.S. 401(k) retirement plans, marking a major development in the evolution of retirement investing. The directive, titled “Democratizing Access to Alternative Assets for 401(k) Investors,” was designed to expand the investment options available to 401(k) participants by easing restrictions on assets such as private equity, real estate, and crypto investment products. As of 2024, 401(k) plans held $8.9 trillion in assets, and the inclusion of crypto could introduce a substantial influx of capital into the cryptocurrency markets. Analysts from Bitwise and Compass Mining have suggested that this shift could significantly stabilize Bitcoin’s price and increase its adoption, with some forecasts projecting the price of Bitcoin could reach as high as $200,000 by the end of 2025 [2].

The executive order also directed the U.S. Department of Labor to review and potentially revise regulations that have historically limited access to alternative investments within retirement plans. Traditionally, 401(k) offerings have been limited to stocks, bonds, and mutual funds. Now, retirement investors may gain exposure to assets such as real estate, private equity, and crypto-linked ETFs. This development has sparked considerable interest in the financial sector, particularly from major firms like BlackRock and Fidelity, which are already heavily involved in the crypto space through their ETF offerings. BlackRock’s Bitcoin ETF alone holds $84 billion in assets, representing a 57.5% market share, while Fidelity’s offering holds $22.4 billion, or 15.3% of the market [2].

Despite the potential benefits, the inclusion of crypto in 401(k) plans has raised concerns among financial professionals and legal experts. One of the primary concerns is the volatility of cryptocurrencies, which can experience sharp and unpredictable price swings. For instance, Bitcoin has historically been prone to drops of 40% or more within a short period, posing a significant risk to retirement savings. Legal experts warn that this volatility could expose retirement plan sponsors to liability if proper risk disclosures are not made or if a plan offers a crypto investment that suffers a substantial decline [1].

Another key issue is the higher fees associated with some alternative investments. While traditional 401(k) assets typically carry average fees of 0.26%, crypto ETFs and private equity structures often involve much higher costs. For example, some major Bitcoin ETFs charge fees of up to 1.50%, and private equity often operates under a “2 and 20” fee structure, where investors pay 2% in management fees and 20% of their returns. These fees can significantly erode long-term returns and may not be suitable for the average retirement investor [1].

Experts also emphasize the need for updated infrastructure and regulatory frameworks to support the integration of digital assets into retirement plans. Margaret Rosenfeld, chief legal officer at Everstake, pointed out that current retirement plan recordkeeping systems are not designed to handle the complexities of crypto, such as forks, airdrops, and real-time volatility. She recommended that regulators establish clear benchmarks for liquidity, custody, and cybersecurity to ensure that digital assets are “retirement-ready.” Additionally, Rosenfeld suggested that a new standard for what constitutes a “prudent” digital asset investment would help align crypto with the goals of retirement planning [1].

The long-term implications of the executive order remain uncertain. While some analysts see it as a positive step toward broader crypto adoption and portfolio diversification, others argue that crypto may not be a suitable asset for retirement plans due to its inherent risks. Ary Rosenbaum of the Rosenbaum Law Firm recommended that investors consider alternative investment vehicles such as Roth IRAs or brokerage accounts instead of 401(k)s when incorporating crypto into their portfolios. “Crypto is a volatile and complex asset class,” Rosenbaum wrote. “It doesn’t belong in a plan designed to be a financial lifeline for someone’s retirement” [1].

Source:

[1] Bitcoin 401(k)s thrill crypto investors but carry serious risks (https://cointelegraph.com/news/bitcoin-401k-thrills-crypto-investors-serious-risks)

[2] Bitcoin 401(k) Access Could Drive Price to $200K in 2025, ... (https://coinmarketcap.com/academy/article/bitcoin-401k-access-could-drive-price-to-dollar200k-in-2025-bitwise-reports)

[3] Your 401(k) Might Soon Include Crypto, Private Equity, and ... (https://www.advisorpedia.com/investor/your-401k-might-soon-include-crypto-private-equity-and-real-estate)