Crypto and 401k plans: Unpacking the Executive Order

crypto investing crypto strategy Aug 28, 2025

Let’s take a look at what people are saying about the pros and cons of the White House Executive Order allowing crypto in 401(k) plans for US taxpayers – along with my insight into this trending topic.

How big is the 401(k) market?

The U.S. 401(k) market is beast-sized: over $7 trillion at stake heading into 2025, according to Investment Company Institute, covering the retirement hopes and dreams of more than 60 million Americans. If crypto cracks this code, it will go hyperbolic with the momentum from publicly traded digital asset treasury companies, ETFs, and government Bitcoin reserves.

If just 10% or $700B of the $7T 401(k) pot is invested in crypto (at time of writing), the total market cap would increase by approximately 20% overnight. That's a pretty big boost.

The pros of crypto in 401ks

The crypto 401(k) option has clear benefits and potential. Let's start with some of the pros.

Unlock trillions in capital

Let crypto loose in 401(k) plans and you create a demand tidal wave, resulting in a surge in asset prices. Even if a sliver of those trillions chase Bitcoin or Ethereum, demand rockets, prices surge, and the old-school asset mix forever shifts. People already have assets in their 401(k) or are contributing new assets so they don’t have to come up with “new money” to invest in crypto. It will crack the door wide open.

Uninformed demand

When trillions in fresh investment capital suddenly get permission to buy shiny new assets, not every dollar is going to be deployed by a savvy, research-driven investor. Many 401(k) participants jump in because “crypto is hot,” not because they understand blockchain tech, market cycles, or risk profiles. Good ol' fashioned FOMO (fear of missing out) and water cooler talk rules the day. That rush of uninformed demand can pump prices in the short term — but it also sets the stage for panicked selling when volatility hits.

Key Takeaway

People love their 401(k) when it’s up and hate it when it’s down. Unlike other investments, it’s a retirement investment play that comes with unique emotions. People will FOMO in, but complain about the big corrections.

Changing reputation for crypto

When crypto makes the leap to mainstream retirement accounts, it practically the last frontier of legitimization. Bitcoin is already displacing the Magnificent 7 stocks on its way to #1. With big names listing crypto, credibility climbs, skepticism fades, and the digital asset space becomes an investable asset class like any other.

While the crypto retirement account path is not completely new, it was kind of a best-kept secret for a select group of people, which was those using self-directed IRAs, solo 401(k)s, and SEP IRAs to invest in crypto. This group of people represents a much smaller fraction of possible crypto investing candidates.

The cons of crypto in 401ks

Yes, there’s still some potential downside. Here are some cons of crypto 401(k).

Risk perception

401(k)s are built for stability — to grow the upside without lots of downside risk. Now comes crypto, volatile and unpredictable especially if you have a short-term outlook. Stack too much Bitcoin before retirement, and you might wake up to wild swings that rattle your long-term plan.

Big players like Vanguard have thrown up the caution flag, citing volatility, regulatory limbo, and hacking fears. Advisors, tasked with protecting you, may see crypto as too uncertain, too hard to defend — even if the upside calls your name. For now, investment advisor firms still won’t let their advisors recommend it to clients.

Key Takeaway

Fiduciary duty works in two directions. Most people think of a failure in fiduciary duty as recommending an investment that’s not appropriate. The other side of the coin, however, is failing to recommend an investment that is appropriate.

Limited crypto exposure

Employer 401(k) plans typically have a limited selection of investment alternatives so crypto may be a dropdown selection for some plans. Recent commentary from major investment firms underscores this cautious approach: Former Vanguard CEO Tim Buckley has reiterated that the company does not currently offer crypto as an investment option, stating, “...first of all, we do not believe a bitcoin ETF belongs in a long-term portfolio of someone saving for their retirement. It is a speculative asset.”

Key Takeaway

Bitcoin’s volatility narrative is turning into the least risky asset of all assets. Bitcoin was already the least risky asset and people just figuring this out. IYKYK (if you know you know) and explaining this would take another blog. Tim and many others are still off the mark.

The short of it? If you have a 401(k) plan, you have a 401(k) provider. You get a fixed list of possible investments. Now that you can invest in crypto, it’ll be the same thing: a very narrow range of things you can invest in, such as ETFs and other stocks of publicly traded companies of Bitcoin miners and Bitcoin treasury companies – so it’ll be indirect exposure to these things. Crypto in 401(k)s is poised to rewrite the rules, but guardrails are up: regulation, risk management, and old-school skepticism aren’t fading overnight. The winners? Savvy investors who tune in, get educated, and leverage every tool (with an eye on risk management).