The DOL’s plan could unleash trillions of dollars in new demand while raising stark warnings about fees, volatility and risk by allowing 401(k)s to hold cryptocurrencies and private funds.
The U.S. Department of Labor (DOL) is proposing new rules that would allow 401(k) retirement plans to invest in alternative assets ranging from private equity and private credit to cryptocurrencies, potentially opening up a $12.5 trillion defined contribution market for some of Wall Street’s riskiest products. The draft guidance released Monday seeks to “clarify how fiduciaries can add alternative assets” to 401(k)s, providing fiduciaries with a roadmap and legal protections if they document a rigorous review of performance, fee structures, and liquidity before adding such options. The proposal would implement an executive order signed by President Donald Trump last summer that directed regulators to expand access to retirement account alternatives, including digital assets such as Bitcoin and Ethereum.
Under the proposed framework, plan sponsors would not have to offer cryptocurrencies or private funds, but if they did, they would have to demonstrate that the products meet “prudent” standards regarding diversification, valuation, redemption terms, participant understanding, etc. Reuters reported that DOL officials stressed that the measure “does not open the floodgates for private equity, private credit, or virtual currency funds,” instead framing the rule as a way to eliminate blanket prohibitions and replace them with case-by-case analysis. The department will have a 60-day public comment period until late May, after which it can finalize, amend or rescind the rules.
Public markets were quick to react to the prospect of 401(k) money flowing into alternative management companies. Shares of Apollo Global Management, Blackstone and KKR rose 4% to 5% on Monday, reversing some of the more than 20% losses they suffered as fundraising slowed in early 2026, according to Yahoo Finance. In a separate analysis, Inves estimated that the rule could “open up a $14 trillion opportunity” for companies like Blackstone and Carlyle, pointing to the sheer size of U.S. defined contribution assets and finance.
Although the cryptocurrency market saw only modest movement (Yahoo noted that Bitcoin (BTC) rose about 1% toward the mid-$60,000 range and Ethereum rose just over 2% after the announcement), the proposal formalizes what had previously been a gray area for plan sponsors regarding digital assets. A previous Reuters feature on President Trump’s 401(k) order warned that opening retirement accounts in crypto and private markets “presents new levels of risk to everyday investors who may not fully understand these complexities,” citing Allview Systems executive Phila Hanson about the potential for “increased fees” and the need for “careful consideration.”
The most vocal political critic so far has been Sen. Elizabeth Warren. In a letter obtained by CNBC, Warren asserted that “for the vast majority of Americans, 401(k)s are not a risky playground, but a critical support for retirement security,” and warned that “the introduction of cryptocurrencies into American retirement accounts could result in significant financial harm to workers and their families.”
Warren pointed to a study by the U.S. Government Accountability Office that found crypto assets have “unique volatility” and a lack of reliable methods for predicting returns, highlighting how Bitcoin’s price has fluctuated from a peak of more than $126,000 in October 2025 to around $70,000 by early February 2026. She also cited estimates from the Center for American Progress that President Trump and his family have reserved about $12 billion. He has made crypto-related profits in the year following his reelection in 2024, and argued that given the high fees and drawdown risk, there is “no reason to expect that allowing plans that offer these alternative investments will result in better outcomes for participants.”
In a previous crypto.news article on South Korea’s own efforts to expand access to digital assets in retirement products, regulators similarly emphasized the need for guardrails around stablecoins and high-risk tokens, suggesting the battle over how far to take crypto exposure is only just beginning, even as jurisdictions race to modernize their savings systems. In another article, we explored how U.S. exchange-traded funds are already bringing Bitcoin exposure into IRAs and brokerage accounts, and previewed many of the same diversification versus volatility arguments currently playing out around 401(k)s. Our third article on institutional portfolio construction highlighted how pensions and endowments typically limit crypto allocations to low single digits. This standard could serve as a benchmark for how aggressively sponsors plan to accept the DOL’s proposal if it becomes law.
