Interest in bitcoin in 401(k) plans has grown considerably as regulatory guidance has shifted and plan sponsors seek new ways to diversify retirement offerings. On May 28, 2025, the U.S. Department of Labor (DOL) rescinded its 2022 guidance that had previously discouraged fiduciaries from including cryptocurrency options in 401(k)s. This move reaffirms a neutral stance, allowing plan sponsors greater discretion in making investment decisions (U.S. Department of Labor, 2025).

Recent industry research found that 94% of institutional investors believe in the long-term value of blockchain technology, and 68% have invested or plan to invest in Bitcoin exchange-traded products. As Secretary of Labor Lori Chavez-DeRemer stated, “Investment decisions should be made by fiduciaries, not D.C. bureaucrats.” For more information on plan design and compliance, see our 401(k) resources.

This change does not mean every plan should add crypto overnight. Instead, it marks a new era of employer responsibility: organizations must weigh potential benefits and risks, consider participant education, and implement strong governance if they choose to offer cryptocurrency retirement investment options.

The right answer depends on your governance, education, and controls.

The Short Answer: It Depends on Governance, Education, and Controls

When it comes to adding bitcoin in 401(k) plans, there is no one-size-fits-all answer. The decision hinges on how carefully your committee can evaluate, implement, and monitor such options.

Knut Rostad, president of the Institute for the Fiduciary Standard, cautions, “As a huge general rule, crypto doesn't belong in a 401(k), period, end of sentence” (CNBC, 2025). This is especially relevant as Gen Z investors are about four times more likely to own crypto than have a retirement account.

The bottom line: Prudence, due diligence, and controls, not hype or market pressure, should guide your approach.

What Does “Bitcoin in a 401(k)” Actually Mean for Employers?

Think of bitcoin in 401(k) plans as a specialized investment option, not a blanket endorsement of cryptocurrency. In practice, this may involve direct bitcoin holdings or vehicles like a bitcoin ETF in 401(k) accounts.

For example, Fidelity Investments introduced the Digital Assets Account (DAA) in April 2022, allowing employers to let participants allocate a portion of their 401(k) to bitcoin. MicroStrategy was the first employer to adopt this offering, where bitcoin is securely held on Fidelity’s custody platform, and plan sponsors can set contribution or exchange limits (Fidelity, 2022).

Unlike traditional mutual funds, these crypto options require plan sponsors to address custody, liquidity, and participant education at a higher level.

Despite these offerings, available data suggest that participant adoption remains minimal, with crypto assets comprising a small fraction of the overall 401(k) market.

The Prudence Lens: Framing the Employer’s Decision

For committees considering cryptocurrency retirement investment options, the prudent path is always a documented, stepwise process. Fiduciary duty under ERISA means evaluating every new investment category against objective criteria and participant best interests. With the DOL’s rescission of its 2022 guidance, sponsors have more latitude, but also more responsibility.

Here’s how prudent decision-making stands out:

• Documented process: Create a written record of your assessment, including due diligence on any crypto product or provider.

• Decision memo: Summarize your rationale, focusing on risk, cost, and participant impact.

• Review cadence: Schedule regular reviews to reassess suitability and compliance as market and regulatory conditions shift.

Experts remain divided on best practices. While AARP strongly advises against crypto in retirement portfolios, some providers like ForUsAll promote cautious adoption with participant education and guardrails.

For more on policy documentation and committee best practices, see our post on Adding Crypto to Your Investment Policy Statement (IPS): A Practical Guide.

Understanding the Key Risks of Bitcoin in Retirement Plans

It’s a question nearly every plan sponsor faces: What are the actual risks of adding bitcoin in 401(k) plans?

The real answer is that risks extend far beyond price swings:

• Volatility: Bitcoin’s price can fluctuate dramatically, often more than traditional asset classes. In a November 2024 report based primarily on 2022 plan data, the GAO found that participant investments in crypto asset options, mainly through self-directed brokerage windows, amounted to substantially less than 1% of the 401(k) market (GAO, 2024; Mayer Brown, 2025).

• Liquidity and access: Some structures, like ETFs, offer more liquidity than direct holdings, but both require careful oversight.

• Custody and operations: Secure storage is critical: Fidelity’s DAA, for instance, uses institutional-grade custody.

• Fees: Digital asset options may carry higher administrative or transaction fees.

• Education burden: Participants may not fully understand crypto risks, increasing the need for sponsor-provided education.

Adding to the complexity, there is no standard methodology for projecting future crypto returns in retirement planning.

For a detailed look at risk controls and plan design features, see our guide on Risk Controls for Crypto in 401(k) Plans: Caps, Eligibility & Auto-Features.

What matters most is recognizing that these risks require controls and ongoing monitoring, not a “set and forget” approach.

Guardrails: How Employers Can Limit the Downsides

If your committee chooses to move forward, implementing guardrails is non-negotiable. Here’s how employers can reduce the downside:

1. Set allocation caps: ForUsAll, a retirement investment platform, limits crypto allocations to 5% of participant portfolios, with most investors averaging around 4%. This cap helps mitigate outsized risk (CNBC, 2022).

2. Define eligibility: Restrict access to participants who have completed educational modules or meet certain criteria.

3. Opt-in only: Make crypto exposure available only to those who actively select it, not as a default.

4. Access restrictions: Limit trading frequency or lock periods to prevent short-term speculation.

5. Removal triggers: Establish clear criteria for removing the option if market, regulatory, or operational risks change.

Internationally, some European pension funds have also implemented small allocation caps as part of their diversification strategy.

For a deeper dive into risk control strategies, see our article on Risk Controls for Crypto in 401(k) Plans: Caps, Eligibility & Auto-Features.

Bottom line: Guardrails are not just best practice, they are essential for fiduciary protection.

Communicating Bitcoin Options to Your Employees

How you communicate about Bitcoin in your plan is as important as the investment structure itself. Employee education and transparent participant communication are crucial.

• Be clear about risks and limits: The DOL’s earlier guidance, and industry consensus, underscore the need for clear education on crypto’s unique risks, such as fraud, theft, and volatility (Woods Rogers, 2025).

• Make resources accessible: Provide educational materials, workshops, and regular updates tailored to varying levels of financial literacy. Consider offering interactive workshops, ongoing seminars, and regular communications to keep participants informed and engaged with best practices.

• Avoid overpromising: Do not promise high returns or guarantee future performance. Instead, focus on helping participants make informed, prudent choices.

For resources designed for employees, direct them to our For individuals section.

Employer Decision Checklist: Is Bitcoin Right for Your 401(k)?

Evaluating whether to add bitcoin in 401(k) plans comes down to a few key questions:

Is your committee prepared to document every step of the decision process, educate participants, and implement monitoring and guardrails?

If you can answer yes, with compliance and participant best interest in mind, you may be ready to explore a crypto offering.

For more detailed checklists and compliance resources, see our 401(k) resources.

Ready to Revisit Your 401(k) Investment Options?

Plan sponsors are entering a new era of discretion and responsibility as regulatory guidance changes. If your team is considering cryptocurrency retirement investment options, it’s critical to proceed with prudence, controls, and participant-first education.

As regulatory guidance continues to change, periodic review and committee oversight remain essential.

Get started (for employers): https://basiccapital.com/get-started/employers

This content is for informational purposes only and is not legal, tax, investment, or compliance advice.

References

U.S. Department of Labor. (2025, May 28). U.S. Department of Labor Rescinds 2022 Crypto Guidance for 401(k) Plans. https://www.dol.gov/newsroom/releases/ebsa/ebsa20250528

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

Fidelity. (2022, April). Fidelity Investments launches Digital Assets Account. https://newsroom.fidelity.com/pressreleases/fidelity-investments-advances-leading-position-as-digital-assets-provider-with-launch-of-industry-s-/s/95b04fcc-3cb9-4548-a0b4-c1cfed9d50ca

Mayer Brown. (2025, June). A return to investment neutrality: DOL rescinds guidance discouraging plan fiduciaries from considering cryptocurrencies. https://www.mayerbrown.com/en/insights/publications/2025/06/a-return-to-investment-neutrality-dol-rescinds-guidance-discouraging-plan-fiduciaries-from-considering-cryptocurrencies

Woods Rogers. (2025). EBSA no longer discourages crypto investments in 401(k) plans. https://www.woodsrogers.com/insights/publications/esba-no-longer-discourages-crypto-investments-in-401-k-plans

U.S. Government Accountability Office. (2024, November). 401(k) Plans: Industry Data Show Low Participant Use of Crypto Assets Although DOL’s Data Limitations Persist (GAO-25-106161). https://www.gao.gov/products/gao-25-106161