The most conservative money in the United States is eyeing cryptocurrencies

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Original author: KarenZ, Foresight News

On March 30, 2026, the U.S. Department of Labor released a 164-page proposed rule titled “Fiduciary Responsibilities for Designated Investment Alternatives.” At the heart of this document is the formal opening of the door to alternative assets for America’s 401(k) market—an economy-sized pool worth over $10 trillion—and digital assets are right behind that door. At the same time, the proposed rule also proactively builds a legal firewall for fiduciaries.

Behind this rule is a complete reversal of the U.S. regulatory stance. In March 2022, the Employee Benefits Security Administration (EBSA) within the U.S. Department of Labor under the Biden administration issued a warning in a toughly worded guidance: before considering adding cryptocurrency to 401(k) investment options, “exercise extreme caution.” The document also listed five specific risk reasons: extreme price volatility, participants’ lack of judgment capability, custody and recordkeeping pitfalls, uncertainty about valuation methods, and an undetermined regulatory environment.

The implication is simple: if you add it, then we’ll investigate you.

Three years later, in May 2025, the same department under the Trump administration publicly withdrew that document and replaced it with a completely opposite logic: crypto assets are legally permissible alternative investments, fiduciaries may make their own judgments, the government neither endorses nor gets in the way.

In August of the same year, President Trump signed Executive Order 14330, “Making It Easier for 401(k) Investors to Access Alternative Assets,” bringing digital assets into the category of alternative assets alongside private equity, real estate, commodities, and infrastructure financing. The executive order’s wording for digital assets is intentionally kept flexible: it does not permit direct holding of cryptocurrencies, but rather allocating to actively managed digital-asset investment vehicles.

A barrier that traps $10 trillion

To understand why this latest proposed rule matters, you first need to clarify what kind of barrier 401(k) is. A 401(k) is the most mainstream employer-sponsored retirement savings plan in the United States—somewhat similar to corporate pension plans in China, but with a much larger scale. Further reading: “Are the pension boosters in place? How big is the 401(k) market?”

The latest data from the Investment Company Institute show that, as of the end of 2025, the total value of U.S. retirement assets reached $49.1 trillion, accounting for 34% of all U.S. household financial assets. Of this, IRA (individual retirement account) assets total an additional $19.2 trillion, and 401(k) plan assets are $10.1 trillion,

For a long time, this huge pool of money has almost only gone into stocks and bonds. Even though the law does not explicitly prohibit alternative assets, more than 96% of defined-contribution (DC) plans such as 401(k)s and 403(b)s have stayed away from them. The core reason is only one thing: fear of lawsuits.

Since 2016, there have been more than 500 fee-related lawsuits against such plans, and the total settlement and payouts by plan sponsors have exceeded $1 billion. The rational choice for fiduciaries has become: not seeking to succeed, but seeking to avoid fault.

Safe harbor: a get-out-of-trouble talisman for fiduciaries

The most substantive change in this new proposed rule is the introduction of a “safe harbor” mechanism.

The logic is straightforward: if fiduciaries (the employers or fiduciaries designated by employers) are afraid of being sued and therefore don’t dare to act, then give them an operating manual—so long as they follow the steps, the court should presume that your decision was prudent, and the space for plaintiff attorneys is greatly reduced.

Specifically, the rule requires fiduciaries, when selecting an investment option that includes alternative assets, to make an objective, systematic assessment across six dimensions:

Performance: You can’t look only at absolute returns; you need to consider risk-adjusted long-term expected returns (e.g., the Sharpe ratio).

Fees: Alternative assets typically have higher fees, so fiduciaries must demonstrate that the higher fees deliver additional value (such as outstanding risk diversification capabilities).

Liquidity: Pension accounts must be ready to meet needs such as participant loans and cash-outs upon leaving employment. Fiduciaries must ensure the fund has sufficiently robust liquidity management plans.

Valuation: You must ensure there is an independent, conflict-free, and timely valuation process for the assets (for non-publicly traded assets).

Benchmarking: You must find a reasonable performance reference point for that asset.

Complexity: The new rule particularly emphasizes that if a fiduciary does not understand digital assets themselves, the prudent process requires them to spend money to hire a professional third-party investment advisor.

At its core, this framework turns “prudent” from a vague moral standard into a checklist you can tick off.

One boundary needs to be clarified. This safe harbor mechanism covers “designated investment alternatives”—that is, investment options screened by the plan fiduciary and formally listed in the lineup. The original text, in the definitions section, explicitly excludes “self-directed brokerage accounts”: investments selected by participants through a brokerage window are not within the scope of this rule’s safe harbor.

This distinction means that at the level of the listed options, crypto assets will not appear in the form of “directly buying Bitcoin.” A more realistic path is to package them into an asset allocation fund—for example, a Target-Date Fund (TDF), which automatically adjusts risk based on the retirement year, allocating part of its holdings to an actively managed digital-asset investment fund, thereby indirectly holding exposure through a portfolio structure.

In Executive Order 14330, the description of digital assets also uses this same structure: “holding actively managed investment vehicles that invest in digital assets.”

Not just a federal-level story

Even more worth attention is the spillover effect of this policy shift.

While the federal level is loosening the reins, the states are following suit. On February 25, 2026, Indiana’s state legislature passed a bill requiring certain state-level retirement plans to provide a self-directed brokerage account entry with at least one crypto investment option by July 1, 2027. States such as Texas, Florida, and Wyoming are also pushing digital assets into public retirement systems in their own ways.

From the industry side, the Department of Labor has acknowledged that for the three categories of beneficiaries—private equity, hedge funds, and digital asset investment firms—there is currently not enough data to assess their number and scale, and it has opened a dedicated channel for soliciting comments to collect industry information.

In the document, the Department of Labor also admits that there is currently not enough data to assess the number and scale of institutions marketing digital-asset products to the 401(k) market, and it has specifically opened a channel for soliciting comments to collect industry information.

When the world’s largest long-term pool of capital starts, under the protection of law, to systematically add cryptocurrency as its underlying asset through scientific allocation models, it means not only an influx of vast amounts of long-term, stable capital, but also the full establishment of digital assets within the mainstream society’s credit system.

Of course, after the rule is published, there will be a 60-day public comment period. After that, the Department of Labor will revise the rule based on feedback, resubmit it for White House approval, and ultimately finalize it. By the time the entire process is completed, it could be at the end of 2026—or later.