US lawmakers are urging Securities and Exchange Commission (SEC) Chair Paul Atkins to expedite an executive order that would facilitate crypto investments within the nation’s 401(k) retirement plans. In a letter addressed to Atkins, nine members of Congress, including House Financial Services Committee Chairman French Hill and Subcommittee on Capital Markets Chairman Ann Wagner, emphasized the need for swift action to support the Secretary of Labor in the effort to adjust current regulations and guidance surrounding these investments.
The initiative is grounded in President Donald Trump’s executive order from August, which aimed to “Democratize Access to Alternative Assets for 401(k) Investors.” The lawmakers pointed out that this order tasks the SEC with the responsibility of making alternative assets, such as cryptocurrencies, more available for participant-directed retirement plans, factoring in the existing constraints set by accredited investor and qualified purchaser rules.
The lawmakers expressed optimism that facilitating crypto investments would benefit the approximately 90 million Americans currently barred from investing in alternative assets, enabling them to secure a more comfortable retirement. They reiterated that every American should have access to investment opportunities that could potentially enhance their net risk-adjusted returns, assuming plan fiduciaries deem such investments appropriate.
This push follows a recent reversal of the Labor Department’s previous guidance, which cautioned fiduciaries to exercise extreme caution when incorporating cryptocurrencies into retirement portfolios.
Significantly, implementing Trump’s executive order could drastically alter the landscape of the $9.3 trillion US 401(k) retirement market by introducing a new avenue for investment in crypto. Analysts suggest that even a modest 1% allocation of 401(k) assets into cryptocurrency could result in approximately $93 billion in inflows. This would surpass the $60.6 billion that has already flowed into spot Bitcoin exchange-traded funds (ETFs) since their introduction in January 2024.
Current trends reveal that some public pension funds are already exploring crypto exposure, with the State of Michigan Retirement System notably expanding its crypto ETF holdings. In the second quarter, it invested $10.7 million in the ARK 21Shares Bitcoin ETF and retained about 460,000 shares of the Grayscale Ethereum Trust, valued at approximately $15.6 million. Conversely, the State of Wisconsin Investment Board recently divested its shares in BlackRock’s iShares Bitcoin Trust ETF after being one of the early public pension funds to invest in crypto ETFs.
The call to action from lawmakers signals a significant push for normalization of cryptocurrency investments within mainstream financial vehicles, with potential implications for the future of retirement funding in the United States.
