The US Department of Labor has moved a step closer to opening retirement portfolios to digital assets after formally advancing a proposed rule that would expand investment options within 401(k) plans.
A notice for the proposal, titled “Fiduciary Duties In Selecting Designated Investment Alternatives,” was published in the Federal Register on Monday following White House clearance earlier in March.
The draft outlines how retirement plan fiduciaries can evaluate crypto and other alternative assets, marking a shift from internal review to a public consultation phase with a 60-day comment period now underway.
The rule change aligns with an executive order signed by US President Donald Trump in August that directed the Department of Labour, the Securities and Exchange Commission, and the Treasury Department to revisit existing constraints on 401(k) investment offerings.
White House review was completed on March 24 by the Office of Information and Regulatory Affairs, with the clearance reported two days later.
The administration has classified the proposal as “economically significant,” pointing to expectations that it could materially affect capital flows across the roughly $10 trillion retirement market.
The draft defines digital assets as “a new form of investing that includes a wide variety of assets that can be stored and transmitted digitally, including cryptocurrencies such as bitcoin and other tokens,” placing them alongside other alternative asset classes under consideration.
Commenting on the development, Labour Secretary Lori Chavez-DeRemer said the proposal reflects how the investment landscape has evolved.
“This greater diversity will drive innovation and result in a major win for American workers, retirees, and their families,” she added.
What does this mean for the crypto industry?
Regulatory clarity around fiduciary responsibilities has been a key barrier to the broader adoption of alternative assets within retirement plans.
Although plan managers were not explicitly prohibited from including such assets, concerns around liability under the Employee Retirement Income Security Act kept allocations largely confined to traditional instruments.
By introducing a structured six-factor framework covering performance, fees, liquidity, valuation, benchmarking, and complexity, the Labour Department is attempting to reduce legal uncertainty.
Fiduciaries that follow this process would be less exposed to being challenged in court over investment selection decisions.
A finalised rule could have far-reaching implications for digital assets.
Access to even a small portion of retirement capital could translate into a sizable inflow, given the scale of funds held in 401(k) accounts.
Retirement-driven allocations also tend to be longer-term in nature, which could support more stable liquidity conditions compared to retail-led participation.
Institutional positioning has already begun to take shape.
Morgan Stanley has advised allocations in the 2% to 4% range for certain investor profiles, while BlackRock has taken a more conservative stance, recommending 1% to 2% exposure within diversified portfolios.
Should the proposal be finalised, asset managers are likely to accelerate the development of products tailored for retirement platforms, including actively managed digital asset funds and exchange-traded structures designed to meet daily valuation and liquidity requirements.
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