President Donald Trump signed an order on Aug. 7 allowing crypto in 401(k) plans, subject to agency rulemaking.
The directive tells the Labor Department, the SEC, and Treasury to revisit constraints on plan menus, opening the door for defined contribution plans to add sleeves tied to Bitcoin and ether through pooled vehicles.
The focus now is on the size of the default crypto allocations and the number of plans that implement them, since those factors will determine actual investment flows more than the policy announcement itself.
According to the Investment Company Institute, defined contribution (DC) assets stood at $12.2 trillion on March 31, with $8.7 trillion in 401(k)s. That base means even a 0.10% default inside qualified default investment alternatives, such as target date funds or collective investment trusts, would theoretically amount to $12.2 billion if adopted across the DC universe.
A quarter of plans deploying a 0.25% sleeve would equate to roughly $7.6 billion in structural bids sourced from payroll contributions and employer matches. The size of these modeled flows turns on two levers that plan sponsors control, the default percentage and the share of plans that implement it.
The policy context matters for fiduciaries. On May 28, the Labor Department rescinded its 2022 crypto compliance release that had warned fiduciaries to exercise “extreme care,” removing a key chill around menu design, per the agency’s release. The new order layers on top, instructing staff to craft avenues for access within ERISA rules.
As PLANADVISER reported, the work now shifts to guidance and product plumbing, including how DC plans can hold crypto via regulated wrappers and how recordkeepers map those positions in plan portals.
Distribution will run through defaults, where most dollars live. Target date funds dominate participant flows and house the qualified default for many plans. As MarketWatch reported last month, large managers have already begun adding…
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