The regulatory and market environment for Bitcoin in 401(k) plans has changed significantly over the past few years. On May 28, 2025, the U.S. Department of Labor (DOL) formally rescinded its 2022 “extreme care” guidance regarding crypto in retirement plans, clarifying that ERISA relies on established fiduciary principles rather than a separate “extreme care” standard (U.S. Department of Labor, 2025).

Further momentum came in August 2025, when President Trump’s executive order called for the DOL and SEC to reexamine and facilitate access to alternative assets—including cryptocurrencies—for participant-directed retirement plans (White House, 2025). For plan sponsors, these regulatory shifts create new choices and responsibilities. While the regulatory gate is no longer as restrictive, the responsibility for prudent review and plan governance now falls squarely on the sponsor.

For a deeper dive into these developments, see our 401(k) resources hub.

The Short Answer: What’s Actually Possible for Bitcoin in a 401(k)

It’s a question nearly every employer and plan sponsor faces: Is it really possible for employees to hold Bitcoin in their 401(k) plans, and if so, how?

The answer is yes, if the employer’s plan design allows for it. As of November 2024, a Government Accountability Office (GAO) report identified 69 crypto asset investment options available to 401(k) participants via methods like self-directed brokerage windows (AARP, 2025). Major plan providers like Fidelity have begun piloting Bitcoin options for select employers, although many sponsors still await further clarity before rolling out new offerings. The DOL does not require comprehensive reporting from small plans, so the true number could be higher or lower (HR Brew, 2025).

Most importantly, the structure of the exposure matters: employees may access Bitcoin directly (rare) or more commonly through regulated funds or ETFs. For detailed employer guidance, visit our 401(k) resources.

What “Bitcoin Exposure” Means in a 401(k): Direct Coins vs. ETFs

Plan sponsors should understand the core distinction: Bitcoin exposure in a 401(k) can mean direct ownership of coins or exposure through vehicles like ETFs and funds. In January 2024, the SEC approved spot Bitcoin ETFs, allowing investors to gain exposure to Bitcoin without actually holding the cryptocurrency itself (Congressional Research Service, 2024). For most sponsors, this distinction shapes risk, compliance, and participant experience. Learn more about the differences between direct crypto and Bitcoin ETFs in our resource on what’s different for sponsors.

Fund/ETF-Style Exposure: The Mainstream Path

Most mainstream 401(k) plans that offer crypto do so through regulated ETFs or funds. These vehicles are subject to SEC oversight and can be integrated into plan menus with familiar operational processes. Sponsors often favor ETFs because regulatory oversight and fund infrastructure minimize custody and compliance headaches.

ETF-style exposure is now the most common, and accessible, path for plan participants to gain Bitcoin exposure in a retirement account.

This approach simplifies custody, lowers administrative burden, and can help sponsors manage risk more effectively than offering direct coin holdings. Even as more plans allow ETF-based crypto exposure, participant uptake remains modest, highlighting the importance of clear participant education initiatives.

Other Structures: Direct Crypto and Beyond

It’s tempting to believe that giving employees direct access to Bitcoin is just a matter of adding a new fund. But there’s a critical nuance: direct crypto exposure is rare due to complex custody, compliance, and valuation risks. Many plan sponsors remain hesitant or outright opposed to these options, with industry experts emphasizing the litigation risk and high volatility associated with direct coin investments (CNBC, 2025). Some early adopters even faced lawsuits or had to partner with specialized custodians to mitigate these risks.

For more on offering crypto in a 401(k) without breaking ERISA, see our process guide.

What Sponsors Control: Menu Design, Eligibility, and Risk Controls

Sponsors have substantial control over whether and how cryptocurrency 401(k) regulation is reflected in their plan. Menu design, eligibility requirements, contribution caps, opt-in processes, and participant education are all tools sponsors can use to manage risk and keep participant interests at the forefront.

Here’s how plan sponsors can approach these decisions:

• Menu Design: Limit crypto options to regulated vehicles (like ETFs) to reduce operational burden.

• Eligibility & Caps: Restrict eligibility or cap allocations to limit volatility and concentration risk.

• Opt-In & Education: Require affirmative opt-in and provide educational resources before allowing access to crypto investments.

• Monitoring: Set a cadence for reviewing crypto investment performance and compliance with plan policy.

Industry sentiment remains cautious. As Knut Rostad, president of the Institute for the Fiduciary Standard, stated, “As a huge general rule, crypto doesn't belong in a 401(k), period, end of sentence” (CNBC, 2025). While no DOL regulation currently mandates crypto-specific risk controls, thorough documentation and ongoing participant education are strongly recommended.

For a full policy and process checklist, see our employer guide.

Governance and Prudence: What ERISA Still Requires

When it comes to offering crypto in a 401(k), the DOL’s updated stance may be neutral, but fiduciary duties under ERISA remain paramount. As reinforced in the DOL’s May 2025 guidance:

“Plan fiduciaries must consider all relevant facts and circumstances when evaluating any particular investment, including cryptocurrency.” (U.S. Department of Labor, 2025)

As retirement law expert Richard E. Nowak notes, “the Labor Department was returning to its historical approach of taking a neutral standard toward particular investment types and strategies.” This means sponsors should document all decision-making processes, conduct thorough due diligence, and verify that investment options serve the best interests of plan participants.

For more on risk controls for crypto in 401(k) plans, consult our risk control resource.

Operational Realities: Custody, Fees, and Participant Education

The operational challenges of adding crypto to a 401(k) are significant. Custody solutions for digital assets require specialized providers, and the risk of cyber threats or loss of keys is real. Crypto’s digital structure makes these assets particularly vulnerable to cyber threats and valuation discrepancies, which traditional recordkeepers may not be equipped to manage.

Fees for crypto investments can be higher than traditional assets, and transparency is crucial. Most plan participants are unfamiliar with the risks and mechanics of cryptocurrencies, making participant education programs essential.

Case studies from providers like ForUsAll and Fidelity show that while participant interest is real, actual adoption rates remain modest, often because the operational hurdles and education burden are higher than for traditional investments.

For operational best practices for 401(k) sponsors, visit our 401(k) resources.

Risk Buckets: Volatility, Concentration, and Education Burden

Too many sponsors focus only on the potential upside of adding crypto to a 401(k), without fully considering the risks to participant outcomes.

Key risks include:

• Volatility: Crypto assets like Bitcoin are highly volatile, which can lead to major swings in account values.

• Concentration Risk: Allowing high allocations to crypto can increase overall portfolio risk.

• Liquidity & Fees: Crypto assets may be less liquid and come with higher fees.

• Education Burden: Most participants will need additional education to make informed decisions.

While specific government simulations on volatility for high bitcoin allocations in retirement plans are limited, it is universally recognized that these risks are unique and significant for retirement investors. The GAO found that a 20% allocation to Bitcoin led to higher volatility than smaller allocations of 1% and 5% in its simulations.

For a list of due diligence questions for crypto 401(k) providers, see our question guide.

Sponsor Action Checklist: What to Verify Before Adding Crypto

Before offering any crypto investment, sponsors should verify:

1. Current regulatory status for crypto in retirement plans.

2. Documentation of all investment policy decisions.

3. Participant education materials addressing risks and mechanics.

4. Caps or limits on crypto allocations.

5. Ongoing monitoring of crypto investment performance.

6. Security protocols for custody and recordkeeping.

7. Fee transparency for all crypto options.

8. Opt-in process for participants.

9. Review cadence for plan investment menus.

10. Consultation with legal and financial advisors.

11. Monitor regulatory developments for updates from the DOL, SEC, and major providers.

For a full policy and process checklist, see our employer guide.

Employee Box: How to Ask HR About Crypto in the 401(k)

Employees interested in crypto options should start by asking HR or plan sponsors about the availability of crypto investments. While 76% of crypto holders report a positive impact on their lives, comprehensive data on employee demand for crypto in retirement plans is still emerging (Forbes, 2025). While few major employers have fully adopted these options, employee requests can prompt reviews by benefit committees.

For a ready-to-use email template, see our request tool or visit our For individuals page.

Next Steps for Employers: Stay Informed, Stay Prudent

As the regulatory and market landscape changes, plan sponsors must stay vigilant.

The DOL and industry experts recommend that sponsors consult with legal and financial advisors before offering crypto in a 401(k) to confirm compliance with ERISA and prudent plan governance. As regulatory guidance changes, periodic policy reviews are essential to maintain plan compliance and fiduciary standards.

For more, explore our 401(k) resources for employers or get started (for employers).

References

AARP. (2025). Crypto in 401(k)? What to Know. https://www.aarp.org/money/retirement/crypto-in-401k.html

CNBC. (2025, May 28). Crypto in 401(k) plans: Trump administration eases rules. https://www.cnbc.com/2025/05/28/crypto-in-401k-plans-trump-administration-eases-rules.html

Forbes. (2025, Oct 14). Trump’s 401(k) Bitcoin Order: What It Means for Your Retirement Portfolio. https://www.forbes.com/sites/tonyaevans/2025/10/14/trumps-401k-bitcoin-order-what-it-means-for-your-retirement-portfolio/

Congressional Research Service. (2024, Jan 19). SEC Approves Bitcoin Exchange-Traded Products (ETPs). https://www.congress.gov/crs-product/IF12573

U.S. Department of Labor. (2025). Compliance Assistance Release 2025-01. https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/compliance-assistance-releases/2025-01.pdf

White House. (2025, Aug 7). President Donald J. Trump democratizes access to alternative assets for 401(k) investors. https://www.whitehouse.gov/fact-sheets/2025/08/fact-sheet-president-donald-j-trump-democratizes-access-to-alternative-assets-for-401k-investors/