President Donald Trump signed the order on August 7th, allowing encryption on the 401(k) plan.
The directive tells the Department of Labor, SEC and Treasury to reconsider the constraints on the plan menu, opening the door to a defined contribution plan to add a sleeve tied to Bitcoin and ether through pooled vehicles.
The current focus is on the scale of default cipher allocations and the number of plans to implement them. These factors are because they determine the actual investment flows rather than the policy announcement itself.
According to the Investment Company Institute, on March 31, the defined donation (DC) assets were $12.2 trillion, and $8.7 trillion in 401(k)s. Its base is theoretically: even the 0.10% default for eligible default investment alternative guides, such as target date funds and collective mutual funds. $12.2 billion if adopted throughout the DC Universe.
A half plan rolling out a 0.25% sleeve is equivalent to approximately $7.6 billion in salary contributions and structural bids raised from employer matches. The size of these modeled flows turns on the plan sponsor control, the default percentage, and the two levers that plan shares the plan that implements it.
The context of the policy is important to the trustee. On May 28, the Labor Bureau retracted its 2022 crypto compliance release, warning trustees to exercise “extreme caution,” and removed the important cold surrounding menu design with each agency release. There is a new ordering class above, instructing staff to create a pathway for access within ERISA rules.
As reported by PlanAdviser, this work is currently moving towards guidance and product plumbing, including how DC plans maintain cryptography through regulated wrappers and how recordkeepers map those positions in the planning portal.
The distribution is performed through defaults where most dollars are published. Target date funding governs participants’ flow and houses eligible defaults for many plans. As reported last month by MarketWatch, large managers are already beginning to add private market sleeves to their new TDF designs.
That same structure can host small cipher sleeves within a variety of glide paths, and pay cadences turn that sleeve into a stable primary market bid for the underlying ETF that holds spot Bitcoin or Ethereum. The results go beyond a single surge towards the flow of the programme reaching pay cycles and rebalancing dates.
How much can 401(k) bring to cryptography?
Glide Path Math Frames is a realistic range for 2026. Using ICI’s DC-based default of 0.10% across 10% of assets refers to cryptographic demand of approximately $1.22 billion. The default of 0.50% across 25% of assets refers to around $15.3 billion, while the default of 1.00% across half of the market reaches around $61 billion.
| Adoption → /Default↓ | 0.10% | 0.25% | 0.50% | 1.00% |
|---|---|---|---|---|
| 10% of DC assets | $12.2 billion | $3.05 billion | 61 billion dollars | $12.20b |
| 25% of DC assets | $3.05 billion | $763 million | $15.25B | $3.05 billion |
| 50% of DC assets | 61 billion dollars | $15.25B | $3.05 billion | $61.00B |
| 100% of DC assets | $12.20b | $3.05 billion | $61.00B | $122.00B |
Modeled flow using a US-defined sales base of 12.2t. The values are theoretical and empirical.
Sponsoring a weighted sleeve towards Bitcoin at launch, and when ETFs are included in the platform, Ethereum absorbs measurable share, but the split depends on investment policy statements and the support of record managers. These numbers are default mechanical translation and adoption into the dollar, not forecasting market impact.
Risk management and fees remain central to the discussion. According to the Washington Post, supporters view more menu choices as portfolio diversification, while critics warn that assessment, liquidity and costs require careful design for the context of retirement. The Kiplinger overview adds that sponsors can route exposures through managed accounts or TDFs rather than standalone options. This is a choice that centralizes due diligence and participant communication.
In the crypto market, mechanisms are important. If the plan funds the sleeve through Spot ETFs, new contributions will be converted into major pieces when the stock exceeds the inventory.
In-DC adoption is planned for the ETF primary market rather than the secondary swing, so the default percentage embedded in TDFS and CITS is more important than the menu headings.
The next milestone plans to update the committee of the Investment Policy Statement, along with agency guidance, product submissions and record manager integration. The flow, if implemented, arrives on the schedule, and orders move 401(k) discussions from permission to allocation mathematics.
