Crypto in Your 401(k)? Here’s What Experts Have to Say

Cryptocurrency has become increasingly popular in recent years, attracting attention from investors of all ages. While most Americans are familiar with Bitcoin and Ethereum, featuring these types of digital assets in retirement accounts is only just starting to gain traction, thanks to a recent executive order from President Donald Trump.

This executive order allows 401(k) retirement plans to include cryptocurrencies and other alternative assets, from private equity to real estate. It raises the question: Should you consider adding crypto to your 401(k) retirement portfolio?

Below, we’ll break down the details of this executive order and explore the potential benefits of featuring crypto in your 401(k). We’ll also highlight how Alden Investment Group can help you explore these emerging opportunities while mitigating risk.

Key Takeaways:

• A recent executive order allows 401(k) investors to feature alternative assets, including actively managed crypto funds, in their retirement portfolios, expanding their opportunities for growth and diversification.
• While crypto and other digital assets have the potential to deliver outsized returns, they’re also highly volatile and face ongoing regulatory uncertainty.
• Experts suggest keeping crypto allocations small (1% to 5% of your portfolio) and tailoring exposure based on your retirement timeline and risk tolerance.
• Working with a skilled financial advisor can help you integrate these assets into your 401(k) safely and strategically.

The Executive Order: “Democratizing Access to Alternative Assets for 401(k) Investors”

Historically, 401(k) retirement plans only allowed participating investors to access conventional assets, such as stocks, bonds, and cash equivalents. Fiduciary plan managers could face litigation if they added alternative investments, even in cases where these vehicles could provide better long-term returns and stronger diversification. These restrictions effectively barred millions of Americans from accessing alternative assets, reserving these opportunities for wealthy individuals and government employees covered by public pension plans.

President Trump’s new executive order, “Democratizing Access to Alternative Assets for 401(K) Investors,” strives to eliminate these imbalances by giving everyday Americans broader access to alternative investments in retirement plans. The goal is to empower participants to pursue more competitive returns, enhanced diversification, and stronger financial security.

Signed into law on August 7th, 2025, this executive order states: “It is the policy of the United States that every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity for plan participants and beneficiaries to enhance the net risk-adjusted returns on their retirement assets.”

Read More: Donald Trump’s Election Victory: The Stock Market’s Response and Economic Outlook

What Counts as an “Alternative Asset?”

The recent executive order defines “alternative assets” quite broadly. It encompasses a diverse range of asset classes, including:

• Actively managed digital asset funds – These funds provide exposure to cryptocurrencies and other blockchain-based assets, such as Bitcoin, Ethereum, and other digital tokens. Rather than requiring investors to manage their crypto holdings themselves, professional fund managers decide when to buy, sell, and hold these assets with the goal of optimizing returns while actively managing risk.
• Private market investments – These include stakes in companies or other financial instruments that aren’t traded on public stock exchanges. Unlike publicly traded stocks, these investments are often less liquid and may require longer holding periods. Managers of private market investments may take an active role in guiding the company’s operations, providing the potential for enhanced returns. Some common examples include private equity funds, venture capital, or privately issued debt.
• Real estate investments – This category covers both direct and indirect ownership of real estate, as well as debt instruments backed by real estate. Some examples of direct ownership include buying a commercial property or residential building, while indirect ownership typically involves investing through a real estate fund or trust. These investments give participants access to the real estate market, which can provide steady income through rent or long-term appreciation.
• Commodities – This category includes tangible goods that have intrinsic value, such as gold, silver, oil, or agricultural products. Commodity investments can provide stronger diversification and potentially serve as a hedge against inflation or economic uncertainty. Participants can invest directly in commodities or through funds that track commodity prices.
• Infrastructure projects – These investments help finance large-scale public or private infrastructure, such as roads, bridges, airports, energy facilities, or water systems. They often provide long-term, stable cash flows, since they serve essential public needs. They can also add valuable diversification to a retirement portfolio.
• Lifetime income strategies – These investment approaches are designed to provide a predictable income throughout retirement. Some examples include longevity risk-sharing pools or other annuity-like structures that distribute payments over a participant’s lifetime. They aim to reduce the risk of outliving one’s retirement savings and provide financial security for older investors.

Read More: How to Use Different Management Styles to Enhance Your Clients’ Returns

When Will This Executive Order Take Effect?

While the executive order was signed on August 7th, its implementation isn’t going to be instantaneous. After all, the executive order directs the Department of Labor (DOL) to:

• Reexamine its past guidance related to fiduciary duties under the Employee Retirement Income Security Act of 1974 (ERISA), which requires employers to act in their employees’ best interests when selecting retirement options and to place a strong emphasis on stability and predictable growth.
• Propose rules or safe harbors for offering alternative assets in 401(k) and other defined-contribution plans.
• Collaborate with the Treasury Department, the Securities and Exchange Commission (SEC), and other federal regulators to ensure consistency while implementing these changes.

Once the DOL completes these steps, 401(k) plan sponsors and administrators can start developing and implementing new processes to incorporate alternative assets into their offerings, from updating their reporting systems to coordinating with third-party vendors. Naturally, these changes will take time, too.

For these reasons, the full rollout of alternative assets in retirement plans will likely be gradual. The good news is that this transition period will allow plan sponsors, fiduciaries, participants, and financial advisors the necessary time to carefully evaluate the benefits and risks of cryptocurrencies and other alternative assets.

Read More: Active vs. Passive Investing: Which Approach Fits Your Goals?

What are the Benefits of Holding Crypto in Your 401(k)?

In 2025, there are many compelling reasons to consider including some crypto in your 401(k). The benefits include:

• Potential for outsized returns – While initially viewed as a fringe trend, cryptocurrencies have earned mainstream attention and credibility among investors by delivering remarkable returns. For example, Bitcoin’s price surged over 120% in 2024, following an even more impressive 160% gain in 2023. In comparison, the S&P 500 only grew 26% and 25%, respectively, over the same periods.
• Diversification – Cryptocurrencies and other alternative assets often follow distinct trends. As conventional investments respond to economic cycles, these alternatives can provide a potential hedge against market swings. Even a modest allocation can enhance your portfolio diversification, helping you improve your long-term risk-adjusted returns.
• Access to innovative asset classes – Holding crypto in your 401(k) offers you exposure to cutting-edge technology and emerging financial markets. Thus, your portfolio may benefit from upcoming innovations in blockchain, decentralized finance, and digital assets that aren’t available through traditional investments.

Read More: Blockchain and the Future of Auditing

What are the Risks of Holding Crypto in Your 401(k)?

While the potential rewards of crypto are compelling, their risks for retirement accounts can be substantial. Here are some downsides to be aware of:

• Volatility – One of crypto’s most significant concerns is its extreme volatility. For instance, Bitcoin’s price tumbled over 50% in 2013, 70% in 2017, and 57% in 2020. By comparison, the S&P 500’s largest decline over the same period was just 23% in 2022. These dramatic price swings are especially risky for investors approaching retirement. If the value of their crypto holdings drops when they need to withdraw funds, they may be forced to sell at a loss, potentially derailing years of careful retirement planning.
• Lack of passive income – Unlike stocks and bonds, most cryptocurrencies don’t pay dividends or generate interest. As a result, they don’t provide the steady stream of passive income that traditional investments offer. Without this compounding effect, crypto holdings rely entirely on price appreciation to deliver returns.
• Regulatory uncertainty – While the recent executive order opens the door for alternative assets in 401(k)s, cryptocurrencies still operate in an evolving regulatory landscape, where some digital assets face more clearly defined regulations than others. As of July 18, 2025, stablecoins are governed by the GENIUS Act. This legislation establishes requirements for full reserve backing, monthly transparency reporting, and independent third-party audits, giving investors greater confidence in these coins’ stability. In contrast, the broader crypto market, including Bitcoin, Ethereum, and other digital assets, remains lightly regulated. As a result, integrating these assets into your 401(k) could increase your exposure to unforeseen legal or compliance changes that potentially affect their value, accessibility, or management within your retirement account.

In light of these risks, many experts advise 401(k) participants and other investors to carefully evaluate their risk tolerance and investment objectives before allocating a significant portion of their portfolios to digital assets.

Read More: Market Volatility: The Greatest Victory is to Conquer Yourself

How to Integrate Crypto into Your 401(k) Cautiously and Strategically 

Since crypto comes with a unique mix of opportunities and risks, investor sentiment remains sharply divided. A recent Seeking Alpha poll with over 1,500 participants found that only 32% support including crypto in 401(k) plans, while 68% oppose it.

Despite many investors’ hesitant attitudes, over one in four Americans already invest in digital currencies. They just do so outside of their 401(k)s.

If adding cryptocurrencies to your 401(k) piques your interest, you may be able to do so soon. As you incorporate crypto into your retirement plan, keep this expert advice in mind:

• Opt for a modest allocation – Investment experts recommend limiting your crypto exposure in your retirement account to a small portion of your total assets—somewhere between 1% and 5% of your portfolio. This way, sudden market downturns won’t have the ability to decimate your retirement plan while still allowing you to benefit from potential growth.
• Tailor your allocations to your time horizon – Your retirement timeline plays a crucial role in determining how much crypto to include in your portfolio. Many experts warn that larger crypto allocations are only appropriate for younger investors with several decades until retirement. Their extended time horizons provide the flexibility to recover from market downturns and endure periods of high volatility.

In contrast, if you’re nearing retirement, it’s generally wise to limit or avoid crypto exposure to safeguard your savings and minimize the risk of significant losses.

• Take a “wait and see” approach – Crypto’s regulatory clarity is still evolving. If you feel uneasy about investing in digital assets, you may be more comfortable taking a “wait and see” approach, where you observe how the market and regulations mature over the coming years.
• Work with an experienced financial advisor – Successfully incorporating crypto into retirement accounts is easier when you have expert guidance. At Alden Investment Group, we specialize in retirement planning and alternative assets. In turn, our advisors can help design a portfolio that aligns with your goals, risk tolerance, and time horizon. Better yet, they can help you strategically integrate crypto into your 401(k) without compromising your retirement plan’s long-term stability.

Read More: How to Choose a Financial Advisor

Optimize Your Crypto 401(k) Retirement Plan With Alden Investment Group

While cryptocurrencies and other alternative investments are generating excitement, they’re not the right fit for all retirement plans. Their high volatility and evolving regulatory landscape demand a thoughtful and cautious approach.

If you’re interested in integrating cryptocurrencies and other alternative assets in your 401(k), consider partnering with Alden Investment Group. As a Registered Investment Advisor (RIA), we’re uniquely positioned to guide investors and financial advisors as they explore these asset classes.

• Investors – We can match you with one of our skilled financial advisors who understands the nuances of alternative investments, retirement planning, and portfolio diversification. Together, you can design an investment strategy that aligns with your risk tolerance, time horizon, and financial goals and assess whether alternative asset classes have a place in your portfolio.
• Advisors – We provide the tools, technology, and expert collaboration you need to confidently offer alternative investments to your clients. Our innovative solutions enable you to model different allocation scenarios, stress-test portfolios against market swings, and provide actionable insights to help investors pursue their goals. This allows you to concentrate on building strong, lasting client relationships while leveraging best-in-class resources to expand your practice.

Ready to discover how crypto allocations and other alternative assets fit into your 401(k) retirement plan? Connect with a financial advisor today!

Sources:

U.S. Department of Labor. Employee Retirement Income Security Act (ERISA).
https://www.dol.gov/general/topic/retirement/erisa

The White House. Democratizing Access to Alternative Assets for 401(k) Investors.
https://www.whitehouse.gov/presidential-actions/2025/08/democratizing-access-to-alternative-assets-for-401k-investors/

Reuters. Bitcoin more than doubles in 2024 on spot ETF approval, Trump euphoria.
https://www.reuters.com/markets/currencies/bitcoin-more-than-doubles-2024-spot-etf-approval-trump-euphoria-2024-12-31/

Coin Market Cap. Visual Look Back on Bitcoin in 2023.
https://coinmarketcap.com/academy/article/a-visual-look-back-on-bitcoin-in-2023

A Wealth of Common Sense. 2024: It Was (Another) Good Year in the Stock Market.
https://awealthofcommonsense.com/2025/01/2024-it-was-another-good-year-in-the-stock-market/

Coin Desk. Black Thursdays: Bitcoin’s 5 Worst Crashes.
https://www.coindesk.com/layer2/2022/10/24/black-thursdays-bitcoins-five-worst-crashes

Investopedia. S&P 500 Average Returns and Historical Performance.
https://www.investopedia.com/ask/answers/042415/what-average-annual-return-sp-500.asp

The White House. Fact Sheet: President Donald J. Trump Signs GENIUS Act into Law.
https://www.whitehouse.gov/fact-sheets/2025/07/fact-sheet-president-donald-j-trump-signs-genius-act-into-law/

Seeking Alpha. SA Roundtable: Should you add crypto to your 401(k)?
https://seekingalpha.com/news/4492881-sa-roundtable-should-you-add-crypto-to-your-401k

Security.org. 2025 Cryptocurrency Adoption and Consumer Sentiment Report.
https://www.security.org/digital-security/cryptocurrency-annual-consumer-report/