The Department of Labor (DOL) has issued a proposed regulation that would allow retirement plans to include investments in alternative assets, specifically cryptocurrencies and private markets.

"The overarching goal of the proposed regulation is to alleviate certain regulatory burdens and litigation risk that interfere with the ability of American workers to achieve, through their retirement accounts, the competitive returns and asset diversification necessary to secure a dignified and comfortable retirement," the executive summary reads. 

The proposal comes after President Donald Trump's executive order, released last year, instructed the DOL to reexamine its guidance surrounding employers and plan administrators on incorporating these assets into retirement plans.

"The Executive Order (E.O. 14330) pointed out that, currently, many Americans in employer-sponsored defined contribution plans do not have the opportunity to participate in the potential growth and diversification opportunities offered by alternative asset investments," the proposal stated.

DOL Safe Harbor Rule

The DOL has introduced a "safe harbor" rule designed to help shield plan sponsors from lawsuits. Under the guidance, fiduciaries must carefully weigh six key factors when selecting alternative investments: performance, fees, liquidity, valuation, benchmarks, and complexity.

The rule will undergo additional review, including a 60-day period for public comment, before it can be finalized.

"Americans' ability to participate more fully in innovation and economic growth through well-diversified long-term investments is a vitally important priority for effective retirement planning. We look forward to continuing our work to expand opportunities for Americans to build wealth and save for the future," said SEC Chairman Paul S. Atkins in a press release.

U.S. Secretary of the Treasury Scott Bessent commented that the proposed rule is "an initial step" in implementing the Trump’s Executive Order in "a safe and smart manner."

Last Wednesday, the Labor Department lifted restrictions that had previously discouraged the inclusion of cryptocurrencies in 401(k) retirement plans.

Trump’s Ballooning Crypto Fortune

The Labor Department under former President Joe Biden had warned about "significant risks" of adding cryptocurrency investment options to retirement plans, citing the speculative and volatile nature of the asset class.

But since then, the DOL’s Employee Benefits Security Administration rescinded that Biden-era guidance, claiming that it has been "historically neutral” on such investments.

It’s worth noting that since Trump’s second term began, his family’s net worth in cryptocurrencies has surged, with the Trumps earning approximately $1.4 billion from their own crypto projects, Bloomberg reports. Trump's policies have fueled this growth, including signing crypto-friendly legislation and appointing regulators who dismissed lawsuits against the industry.

Trump's policies have fueled this growth, including signing crypto-friendly legislation and appointing regulators who dismissed lawsuits against the industry.

If retirement plans like 401(k)s or IRAs were allowed to hold cryptocurrencies, observers anticipate significant demand for digital assets, which could potentially benefit the Trumps' own holdings or associated businesses.

Positive Development? Or Will ‘Cracks Emerge?’

Cryptocurrency enthusiasts argue that the latest proposal is a step in the right direction.

“This is a positive development, and frankly, an overdue one," Maghnus Mareneck, co-founder and co-CEO of Cosmos Labs told Benzinga. "Beyond individual benefits, this move signals that digital assets are being taken seriously within mainstream financial infrastructure. The priority now is ensuring any firm offering these options in a 401(k) meets the same rigorous compliance standards and consumer protections as traditional financial products.”

Nathan McCauley, CEO and co-founder, Anchorage Digital commented: “Rising institutional demand for crypto–including the option to include it in retirement plans–will naturally raise questions on how it’s custodied, traded, and secured from bad actors. Regulated crypto firms like ours have spent years preparing for this, and our industry should welcome that scrutiny as more Americans gain the ability to engage with crypto."

“Expanding 401(k)s into digital assets and private markets is ultimately about infrastructure catching up,” Gabor Gurbacs, Chairman and CEO of OpenAssets, a leading institutional digital market infrastructure firm, said in a statement.

He emphasized that fiduciary standards evolve to accommodate these assets, focusing on vehicle design, fee transparency, liquidity, and operational resilience. With proper infrastructure, 401(k) participants can access these markets using structures similar to those already employed in institutional portfolios, Gurbacs said.

Growing Pressure

U.S Senator Elizabeth Warren (D-Mass.), a vocal critic of both Trump and the crypto sector, argues against the proposed rule.

As "cracks emerge in the private credit market, private equity returns fall to 16-year lows, and crypto keeps tumbling, President Trump has decided now is the time to stick all of these risky assets into Americans' 401(k)s,” Warren said.

“Americans facing an uncertain future in Trump's economy will now have more reasons to question the security of their retirement savings — all so that Trump's Wall Street buddies have another pile of cash to play with. Anyone who cares about the financial security of working people should oppose this proposed rule,” she continued.

While Bitcoin and other major cryptocurrencies regained some losses on Tuesday after Iran signaled a willingness to pursue peace talks, private credit funds still face rising interest rates, tighter liquidity and a broader risk-off environment. Taken together, these factors have squeezed a corner of finance that expanded rapidly during the easy-money era. 

Oaktree Capital Management elected to fully satisfy all redemption requests, representing 8.5% in its private credit fund for the first quarter. 

Meanwhile, Morgan Stanley (NYSE:MS) curbed redemptions after investors sought to withdraw nearly 11% of shares from its North Haven Private Income Fund and JPMorgan Chase & Co. (NYSE:JPM) has begun restricting lending to software companies in its private credit funds. 

BlackRock Inc (NYSE:BLK) limited withdrawals from its $26 billion HPS Corporate Lending Fund after redemption requests surged to 9.3% of the fund's net asset value.

Photo: Image via Shutterstock/ thanmano