A new executive order signed by President Donald Trump will allow retirement accounts to include alternative investments, including cryptocurrency. This change could soon enable employees to select digital currency investments within their 401(k) plans.
“What this may do is allow a plan sponsor to include some of these riskier asset classes in 401(k),” said Barry Glassman, president of Virginia-based Glassman Wealth Services.
Glassman explained that with the executive order, the Department of Labor would redefine which asset classes are acceptable in retirement plans.
“In the past, we’ve seen stocks, bonds, U.S. foreign, large cap, small cap, and some alternative strategies, but nothing as different as private equity and cryptocurrency,” he said.
For those unfamiliar with cryptocurrency, Glassman suggested thinking of it more like a collectible than a traditional stock.
“It’s more similar to things like gold and silver and bottles of wine than it is to stocks and bonds,” Glassman said.
However, one of the key appeals of digital assets is their utility. Unlike physical assets such as gold, cryptocurrencies like Bitcoin exist on the blockchain and can be used globally without the difficulties of physical transport.
Glassman noted that companies offering crypto options in 401(k) plans will likely focus on major cryptocurrencies such as Bitcoin and Ethereum.
“I doubt plan sponsors will go deep into ‘meme coins’ or anything like that,” he said.
Younger investors in their 20s and 30s are expected to be the primary adopters of crypto investments within retirement accounts.
“They’re used to it, and the idea that their retirement account may build up over time, and may, in fact, be their largest asset at some point,” Glassman said. “It behooves them to have it available in a retirement account.”
One major benefit of investing in crypto through a 401(k) is the potential tax advantages. Like stocks, taxes would only be due upon withdrawal.
“So, if people invest in Bitcoin and it goes up in value and they sell within their 401(k), they’re not taxed on it,” Glassman explained.
Despite the potential, Glassman does not expect cryptocurrency to dominate retirement accounts.
“The amount of crypto owned within retirement accounts, in my opinion, will still be relatively small compared to the amount of crypto out there in nonretirement accounts,” he said.
Glassman also expressed concern about timing, cautioning that crypto prices are near all-time highs.
“My concern is with crypto trading near all-time highs, there’s a far greater chance that people are interested and if this was available today, in 401(k)s, they would plow into it today, versus maybe a time when it dips,” he said.
Source: WTOP on August 8, 2025.
Frequently Asked Questions (FAQ)
What is an executive order, and how does it affect retirement accounts?
An executive order is a directive issued by the President of the United States that manages operations of the federal government. In this context, the executive order signed by President Trump allows for alternative investments, including cryptocurrency, to be included in retirement accounts, such as 401(k) plans. This empowers plan sponsors to offer a wider range of investment options beyond traditional stocks and bonds.
What are "alternative investments" in the context of retirement accounts?
Alternative investments are asset classes that fall outside the traditional categories of stocks, bonds, and cash. Examples include private equity, hedge funds, real estate, commodities, and now, cryptocurrencies. These investments often carry different risk and return profiles compared to traditional assets.
Why is cryptocurrency considered a "riskier" asset class for 401(k) plans?
Cryptocurrencies are generally considered riskier due to their high volatility, speculative nature, and the relative novelty of the asset class. Their prices can fluctuate significantly in short periods, making them a less predictable investment compared to more established assets like stocks and bonds.
How is cryptocurrency different from traditional investments like stocks and bonds?
Unlike stocks, which represent ownership in a company, or bonds, which are loans to an entity, cryptocurrencies are digital or virtual assets secured by cryptography. They often lack the intrinsic value or underlying assets that traditional investments possess. As Barry Glassman notes, they can be likened more to collectibles due to their speculative nature and value derived from market demand and scarcity rather than earnings. However, their utility as a global, digital medium of exchange also sets them apart from physical collectibles.
Which cryptocurrencies are likely to be offered in 401(k) plans?
It is expected that companies offering cryptocurrency options in 401(k) plans will focus on established and major cryptocurrencies like Bitcoin and Ethereum. They are less likely to offer highly speculative or "meme coins" due to the increased risk and regulatory scrutiny associated with such assets.
Who is the primary demographic expected to invest in cryptocurrencies within their 401(k)s?
Younger investors, particularly those in their 20s and 30s, are anticipated to be the main adopters. This demographic is generally more familiar with and open to digital assets and sees the potential for these investments to significantly contribute to their long-term retirement wealth.
What are the tax advantages of investing in cryptocurrency through a 401(k)?
Similar to other investments within a 401(k), any gains from cryptocurrency held within the account would be tax-deferred. This means taxes would only be due upon withdrawal in retirement, allowing the investment to grow tax-free until then.
What are the potential drawbacks or concerns regarding cryptocurrency in 401(k) plans?
A significant concern is the timing of investment. If cryptocurrency prices are near all-time highs when the option becomes available, investors might be incentivized to invest at a peak, potentially leading to losses if the market corrects. Additionally, the inherent volatility of cryptocurrencies remains a factor for long-term retirement planning.
Crypto Market AI's Take
The executive order allowing cryptocurrencies into 401(k)s marks a significant milestone in the integration of digital assets into mainstream finance. This development reflects a growing acceptance of crypto as a legitimate investment class, albeit one that still requires careful consideration due to its inherent volatility. For individuals looking to diversify their retirement portfolios with alternative assets, understanding the nuances of crypto investments is crucial. Our platform offers resources and tools, such as AI-driven market analysis and educational guides on
how to evaluate cryptocurrency, to help navigate these complex markets. As regulatory frameworks continue to evolve, the accessibility of cryptocurrencies within retirement plans is likely to foster greater financial inclusion and potentially unlock new avenues for wealth accumulation.
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