The US Department of Labor has proposed a rule change to expand investment options in 401(k) retirement plans, including cryptocurrency. This move aligns with a directive from US President Donald Trump’s executive order issued in August.
The proposal, titled “Fiduciary Duties In Selecting Designated Investment Alternatives,” was published in the Federal Register on Monday. It outlines factors for retirement managers when incorporating digital assets and alternative investments into client portfolios.
The draft document defines digital assets as investments that can be stored and transmitted digitally, including cryptocurrencies like bitcoin and other tokens. The proposal could potentially unlock trillions of dollars in retirement capital for the digital asset sector, further legitimizing cryptocurrencies as mainstream investment vehicles.
Labor Secretary Lori Chavez-DeRemer stated that the proposed rule aims to reflect the current investment landscape more accurately. She noted, “This greater diversity will drive innovation and result in a major win for American workers, retirees, and their families.”
The proposal advances the US towards implementing Trump’s executive order, which calls for multiple agencies, including the Labor Department and the Securities and Exchange Commission, to revise investment options and regulations.
SEC Chair Paul Atkins emphasized the importance of broadening access to diversified, long-term investments as a “critical priority for effective retirement planning.”
Amid this regulatory environment, Wall Street firms are advising clients on crypto allocations. Morgan Stanley instructed its 16,000 financial advisers, who manage a combined $6.2 trillion in assets, to recommend crypto investments. The firm suggested a 2% to 4% allocation to crypto investments in October.
In contrast, BlackRock, the largest asset manager, advised a more conservative allocation of 1% to 2% for diversified portfolios.
