A significant regulatory step has been taken in the US that closely concerns cryptocurrency markets. The US Department of Labor has proposed a new draft rule that could open the door to investing in alternative assets like Bitcoin in 401(k) retirement plans.
The draft regulation, published by the Department of State’s Employees’ Social Security Administration, aims to provide more than 90 million Americans with access to a wider range of assets in their retirement investments. The proposal details the processes plan managers should follow when including alternative assets in investment options, while also offering “safe haven” guidelines for selecting these assets.
The new regulation comes after a presidential executive order signed by Donald Trump titled “Democratizing Access to Alternative Assets for 401(k) Investors.” U.S. Labor Secretary Lori Chavez-DeRemer stated that the measure aims to align the retirement system with the modern investment world, adding that more diverse investment options will both foster innovation and provide significant benefits for both workers and retirees.
U.S. Treasury Secretary Scott Bessent argued that the regulation offers a balanced approach to protecting retirement assets while expanding investment options. U.S. Securities and Exchange Commission Chairman Paul S. Atkins also said that this initiative would increase Americans’ opportunities for long-term investment and wealth creation.
Under the draft regulation, 401(k) plan managers will be required to objectively and comprehensively evaluate factors such as performance, fees, liquidity, valuation methods, and complexity when determining investment options. Officials state that the regulation does not position any asset class as superior or inferior to another, but adopts a purely process-oriented approach.
Another noteworthy element is the policy shift from the previous period. While it was recalled that the guidance published by the Joe Biden administration in 2022, which warned against including crypto assets in 401(k) plans, was withdrawn, it was stated that the new draft reverses this restrictive approach.
While the proposed regulation is still in draft form, its enactment could pave the way for a wider inclusion of Bitcoin and other alternative assets in US retirement portfolios.
*This is not investment advice.