President Donald Trump’s latest executive order allowing cryptocurrencies in 401(k) retirement plans is more than just a headline-grabber—it could be a turning point in how Americans invest for the future.
For decades, retirement accounts like 401(k)s have been largely restricted to traditional assets such as stocks, bonds, and mutual funds. Now, digital assets like Bitcoin and Ethereum could be added to the mix, potentially rewriting the rules of long-term wealth building.
The timing is also significant. Cryptocurrency adoption in the U.S. has steadily increased, with a 2024 Pew Research survey showing that 17% of Americans have owned crypto at some point, compared to just 1% a decade ago. Meanwhile, the market value of all cryptocurrencies is hovering above $2.5 trillion, demonstrating that digital assets are no longer a fringe investment.
Industry experts believe this policy shift could mark the start of a new era in retirement planning.
As Anthony Pompliano, a well-known crypto investor, put it: “This is the first time average Americans will have the option to add the world’s fastest-growing asset class to their retirement accounts. That’s a big deal.”
If implemented carefully, this crypto order could offer investors more choice, potentially higher returns, and exposure to an asset class that behaves differently from stocks and bonds. However, with opportunity comes risk—especially in a market as volatile and unpredictable as crypto.
Table of Contents
What Trump’s 401(k) Crypto Order Actually Says
The executive order, signed in August 2025, directs the U.S. Department of Labor to update its guidelines for employer-sponsored retirement plans. Specifically, it removes prior restrictions that discouraged or outright prevented 401(k) plan administrators from offering cryptocurrency investment options.
Under the new framework, plan providers can include a limited menu of approved digital assets—initially expected to be established cryptocurrencies like Bitcoin, Ethereum, and possibly regulated tokenized funds. The order also requires enhanced disclosures so participants understand the potential risks and volatility before allocating funds.
This is a notable departure from the Department of Labor’s 2022 stance, which warned against adding crypto to retirement accounts due to concerns over fraud, extreme price swings, and investor inexperience.
By shifting the tone from “discourage” to “permit,” the new order opens the door for financial institutions and custodians to develop crypto-based retirement products that comply with federal standards.
Trump’s move aligns with a growing policy shift toward treating cryptocurrencies not as speculative side bets, but as legitimate investable assets. It also signals a recognition that digital assets are becoming a permanent part of the global financial system—a fact supported by institutional adoption from companies like BlackRock, Fidelity, and PayPal.
How Crypto in 401(k)s Could Reshape Retirement Portfolios
Allowing cryptocurrencies into 401(k) plans could fundamentally change how Americans think about retirement investing. Until now, most retirement portfolios have followed a fairly traditional mix—equities for growth, bonds for stability, and maybe some real estate or commodities for diversification.
Adding digital assets like Bitcoin or Ethereum introduces a new, high-growth component that doesn’t always move in sync with the stock market.
Historically, Bitcoin has shown low correlation with traditional asset classes, meaning it often reacts differently to market events.
According to Fidelity Digital Assets, adding a small allocation of 1–5% crypto to a diversified portfolio could improve long-term returns without dramatically increasing overall risk—provided investors can stomach short-term volatility.
The potential upside comes from crypto’s history of outsized gains during bull cycles. For example, Bitcoin’s average annualized return since 2013 has been over 40%, compared to roughly 10% for the S&P 500 over the same period.
While no one expects that pace to continue indefinitely, even modest growth could give retirement savers an edge, especially younger investors with decades until retirement.
As Ric Edelman, founder of the Digital Assets Council of Financial Professionals, recently said: “For long-term investors, the risk of ignoring crypto may be greater than the risk of including it in a small, measured way.”
His point highlights the strategic potential—crypto could serve as a long-term growth engine within a balanced retirement plan, as long as it’s approached with discipline and clear risk management.
The shift could also encourage more innovation in retirement products, with fund managers creating blended strategies that combine stocks, bonds, and regulated crypto holdings under one umbrella. This could make crypto exposure more accessible to average workers without requiring them to manage private keys or navigate complex exchanges.
Potential Benefits for Investors
The most obvious benefit of adding cryptocurrencies to a 401(k) is exposure to a new source of potential growth. Traditional retirement accounts rely heavily on stocks and bonds, which tend to produce steady, long-term returns. Crypto, on the other hand, is a high-volatility, high-reward asset class. While that volatility can be unnerving, even a small allocation—say, 2–5%—has the potential to boost portfolio performance over time.
Another advantage is tax efficiency. Gains on crypto held in a 401(k) are tax-deferred, meaning you won’t owe capital gains taxes each time the asset appreciates or is rebalanced within the account. This is especially attractive for active savers who plan to hold crypto for decades. In a taxable account, those same gains could create a significant tax bill each year.
This change also opens the door for younger investors to grow wealth differently. Millennials and Gen Z, who are already more comfortable with digital assets, could now integrate crypto into their retirement plans from the start.
Since these groups have the longest investment horizons, they are in the best position to ride out crypto’s ups and downs and potentially benefit from long-term adoption trends.
Institutional adoption is another factor. As large pension funds and retirement plan providers begin offering crypto options, liquidity and trust in the market could increase.
According to PwC’s Global Crypto Hedge Fund Report, institutional participation in crypto markets rose by 38% in 2024—a trend that could accelerate now that 401(k)s have the green light.
Risks and Challenges of Adding Crypto to 401(k)s
While the idea of crypto in a retirement plan may sound exciting, it also comes with serious risks that investors can’t ignore. The most obvious is volatility. Unlike stocks, which tend to fluctuate within a reasonable range, Bitcoin and other cryptocurrencies can swing 10–20% in a single day. This means your 401(k) balance could see bigger short-term changes than you’re used to—especially if your allocation is too high.
Regulatory uncertainty is another challenge. Even though Trump’s order opens the door, the broader U.S. crypto regulatory landscape is still evolving. The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are still debating how certain digital assets should be classified and regulated.
If rules shift in the future, it could impact the availability or tax treatment of crypto within retirement accounts.
Cybersecurity is also a concern. Unlike traditional assets, cryptocurrencies exist in digital form and require secure custody solutions. Large-scale hacks and fraud incidents have occurred in the past, even at reputable exchanges. That’s why the choice of custodian and the security protocols they use will be critical for any 401(k) crypto option.
Another risk is emotional decision-making. Retirement investing is supposed to be long-term, but crypto’s rapid price movements can tempt investors into panic selling or aggressive buying—moves that often harm long-term returns.
As Vanguard’s investment research team has noted, maintaining discipline during volatility is one of the hardest parts of investing, especially for newer asset classes.
Finally, there’s the issue of allocation size. Crypto should likely remain a small part of a well-diversified retirement portfolio. A 2024 study by CFA Institute suggested that portfolios with a 2–5% crypto allocation provided diversification benefits without significantly increasing risk. Anything beyond that can turn your retirement savings into a much riskier bet.
How Financial Advisors Are Reacting to Trump’s Crypto Order
The reaction from financial advisors has been split right down the middle. Some see Trump’s executive order as a forward-thinking step that reflects the growing role of digital assets in global finance. Others are far more cautious, warning that the volatility and regulatory uncertainty we just discussed make crypto a risky fit for retirement plans.
Pro-crypto advisors argue that this is a historic shift in retirement investing. They point to growing institutional adoption—BlackRock, Fidelity, and major pension funds have already been exploring crypto exposure—which suggests the asset class is maturing.
According to a 2025 Fidelity survey, 71% of institutional investors globally now view digital assets as having a place in portfolios, up from just 45% five years ago. For these advisors, Trump’s order simply accelerates a trend that was already underway.
On the other side, more conservative advisors are waving a yellow flag. They worry that average 401(k) participants may not have the experience—or the risk tolerance—to handle crypto’s ups and downs. Some also argue that while Bitcoin and Ethereum have a track record, many altcoins remain untested and could lose most of their value.
As financial columnist Allan Sloan recently noted, “It’s one thing for a hedge fund to take a crypto bet—it’s another for a schoolteacher saving for retirement.”
Many wealth managers are taking a middle-ground approach: they’re open to including crypto in 401(k)s but recommend strict allocation limits and thorough investor education before anyone jumps in. For example, Vanguard has made it clear that while they acknowledge crypto’s potential, they would only consider it for investors who understand the risks and have a long-term plan.
The consensus seems to be that the order will force financial advisors to address crypto whether they like it or not.
As one retirement consultant put it, “Even if you’re not recommending it, you’ll have to be able to explain it—because clients are going to ask.”
What Investors Should Do Before Adding Crypto to Their 401(k)
Before you rush to adjust your retirement portfolio, it’s important to approach this opportunity with a plan. Trump’s order may open the door to crypto in 401(k)s, but how you walk through that door will make all the difference between building wealth and taking unnecessary risks.
The first step is understanding the asset. Even if you’ve heard about Bitcoin for years, crypto investing has unique dynamics. Prices can move sharply in short periods, and the regulatory landscape is still evolving. For context, Bitcoin has experienced multiple drawdowns of over 50% in the past decade—yet it has also delivered an average annual return of over 130% since 2013, according to data from Coin Metrics.
That combination of high risk and high reward means it’s not an asset you buy without knowing what you’re getting into.
Next, decide on your allocation size. Most financial planners who are open to crypto suggest starting small—typically 1% to 5% of your total portfolio—so it has room to grow without threatening your retirement security if the market turns against you.
For younger investors with decades until retirement, there’s more room to take calculated risks. For those closer to retirement, the margin for error is much smaller.
You’ll also want to choose a reputable custodian or plan provider. Look for 401(k) plans that partner with established firms offering institutional-grade security and insured custody solutions. This reduces the risk of losing your assets to hacks or mismanagement.
Finally, keep your perspective long-term. Crypto’s daily price swings can be distracting, but in a retirement account, your time horizon is measured in years—if not decades.
As Ric Edelman, founder of the Digital Assets Council of Financial Professionals, puts it: “If you believe blockchain technology is going to be a significant part of our economy, then small, steady exposure over time makes sense.”
