Trump’s Crypto Boost for 401(k)s: A Bold Move or Risky Bet?

Washington, D.C., May 29, 2025 - The Trump administration on Wednesday rescinded Biden-era guidance that discouraged employers from offering cryptocurrency investments in 401(k) retirement plans, signaling a broader embrace of digital assets. The 2022 Labor Department guidance, which urged plan fiduciaries to exercise "extreme care" when including crypto options, had stifled industry enthusiasm for integrating cryptocurrencies into retirement accounts.

This policy reversal, announced by Labor Secretary Lori Chavez-DeRemer, aims to restore fiduciary autonomy and remove perceived regulatory overreach, paving the way for increased crypto access in workplace retirement plans. However, the move has reignited debates over the risks of cryptocurrency’s volatility in securing workers’ financial futures.

Policy Shift Embraces Crypto in Retirement Plans

The Biden administration’s 2022 guidance had cast a shadow over crypto in 401(k) plans by threatening an “investigative program” targeting sponsors offering such options. This led major providers to shy away from the $7.2 trillion 401(k) market, with only Fidelity and ForUsAll currently offering Bitcoin allocations, capped at 20% for Fidelity clients, per Bloomberg Law. Chavez-DeRemer criticized the prior guidance as an overstep, stating, “Investment decisions should be made by fiduciaries, not DC bureaucrats.”

The Labor Department now adopts a “neutral approach,” neither endorsing nor discouraging crypto investments, aligning with the administration’s pro-crypto stance. This shift coincides with Vice President JD Vance’s keynote at a Las Vegas Bitcoin conference on Wednesday, where he championed digital assets as a hedge against inflation.

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Volatility Risks Spark Concerns

Despite the policy change, critics warn of cryptocurrency’s volatility in retirement accounts. A February 2025 Government Accountability Office report highlighted that a 20% Bitcoin allocation caused portfolio swings up to 50% higher than traditional assets, with no reliable method to project long-term returns. Massachusetts Congressman Richard Neal, ranking member of the House Ways and Means Committee, urged stronger oversight, citing the need to protect workers’ savings from crypto’s “uniquely high volatility.”

Data from CoinDesk shows Bitcoin’s price fluctuated 22% in Q1 2025, underscoring the risks. Meanwhile, Fidelity reported that only 0.4% of its 401(k) clients opted for Bitcoin in 2024, reflecting cautious adoption despite growing interest.

Did You Know?
Only 0.4% of Fidelity’s 27 million 401(k) account holders allocated funds to Bitcoin in 2024, despite the provider offering crypto options since 2022.

Legislative Momentum and Industry Outlook

The policy aligns with legislative efforts to expand crypto access. In April 2025, Senator Tommy Tuberville and Representative Byron Donalds reintroduced the Financial Freedom Act, which would bar the Labor Department from restricting self-directed 401(k) brokerage windows. The bill has gained traction among Republican lawmakers, with a Senate vote expected by late 2025, according to Politico.

Industry experts predict the policy shift could spur innovation, with providers like Charles Schwab exploring crypto offerings, though regulatory uncertainty persists. A Morningstar analysis estimates that 401(k) crypto allocations could grow to $150 billion by 2030 if adoption accelerates, but fiduciary liability concerns may slow progress.