The White House moved this week to push Crypto into retirement investments after President Donald Trump signed an executive order allowing alternative assets to be included.
The directive could expand the way Americans invest in retirement and could give Bitcoin and other cryptocurrencies a stronger role in their long-term portfolio. However, this change does not unfold anytime soon. Analysts say most savers face a big hurdle before they see it on their account.
Under the order, the retirement plan could one day allow the holding of assets like Bitcoin, which have been in high institutional demand since the launch of the US Bitcoin ETF last year. Crypto could become part of mainstream retirement investments.
But even with Trump’s approval, it doesn’t mean that employers will suddenly add a bonk, stubborn penguin, or other meme coins to their employees’ investment menu. Doug Boneparth, a certified financial planner and founder of Bone Fide Wealth, said it was noticeable that “digital assets are attracting presidential attention,” but emphasized that “the reality is even more subtle.”
Employers face legal and risk hurdles before adding codes
The Employee Retirement Income Security Act of 1974 (ERISA) controls how retirement plans are managed, and major changes to investment options require careful reviews and contracts from planning sponsors. These sponsors are the responsibility of the trustees. This means that the plan must be implemented in the best interest of participants and comply with ERISA. This makes it difficult to add volatile, still-developed assets like crypto.
Fidelity broke new grounds in 2022 as the first major provider to offer Savers the option to put Bitcoin in the 401(k), but Doug said whether employees could use it was “at the employer’s risk tolerance and the fiduciary responsibility.” It is not going to shift immediately for executive orders.
Preston Cherry, a certified financial planner and founder of simultaneous financial planning, warned that too many investment options will backfire. “People get overwhelmed by options on the investment menu,” he said.
Even if employers provide education for these investments, workers will still have to choose to receive it, and Preston said participation rates are “usually low.”
He also questioned how the employer would decide which coins would be allowed. Separating Bitcoin, Ether and Solana from other crypto markets requires oversight from the Investment Committee or Plan Sponsor.
Without it, employees could be exposed to coins with extreme price fluctuations. Preston noted that many people “can be destructive because they can’t understand 30%, 40%, or 50% drawdowns.” He is not opposed to the code in his retirement account, but he has urged investors to be “cautious.”
Planning providers and record managers manage final decisions
Even if the employer is willing to add a code, the choice could ultimately take a break with the planning provider and record manager. The US retirement account held $43 trillion in assets in the first quarter, with about $9 trillion in the 401(k)s.
By comparison, the overall crypto market is worth nearly $4 trillion. Integrating the two is a big step, and the companies managing their plan infrastructure decide whether they are worth the operational and regulatory challenges.
Trump’s order follows other administrative moves to promote US domination in cryptography. In July he signed the first stable law of the United States, the Genius Law. The Securities and Exchange Commission has also launched Project Crypto, which aims to update the securities rules for crypto-based transactions.
“The planning provider, third-party provider, record manager, will decide on the final results here, whether they want to encrypt or not,” said Tyrone Ross, CEO of Registered Investment Advisor 401 Financial.
He added that while the administration is committed to making the US a global crypto hub, major companies such as Fidelity, Schwab, Masmatial and Vanguard may not be in a hurry to implement the change.
Doug agreed that the executive order is “more symbolic than its current structure.” But he also said it opens the door for education in retirement spaces. He believes Bitcoin has a long-term place in a diverse portfolio, but he emphasized that before offering it, the trustees need to weigh and weigh opportunities and risk.
“If you do this right, the doors will gradually open to the future of retirement investment,” Doug said. “If you don’t, who knows what meme coins will be seen in the retirement plan statement?”