Labor Department 401(k) Crypto Rule Reaches White House, Altcoins Not Excluded

The US Labor Department's proposed rule that would make it easier for 401(k) retirement plans to offer cryptocurrency reached the White House for final review on Thursday, according to the Office of Information and Regulatory Affairs. The proposal doesn't exclude altcoins, but legal and operational hurdles mean smaller tokens are unlikely to reach retirement accounts before Bitcoin (BTC) and Ether (ETH).

The March proposal names no specific digital assets and sets no minimum market capitalization requirement. Instead, it directs plan managers to weigh six factors: performance, fees, liquidity, valuation, benchmarks and complexity. The rule aims to expand access to alternative investments like crypto while giving employers and plan managers greater legal protection.

Which tokens actually clear the bar?

Teresa Goody Guillén, managing partner at Bellementis PLLC, said Bitcoin and Ether are the likely first movers because of their established markets and investment products. The two assets rank first and second by market capitalization — roughly $1.5 trillion and $273 billion respectively, according to CoinGecko data as of 20:01 UTC on Nov. 6.

That doesn't lock out altcoins, she said. Fiduciaries would simply have to show their selections are prudent.

"The real question isn't which cryptocurrencies regulators pick – it's whether an investment meets the same standards of prudence, liquidity, valuation and investor protection as any other retirement option," Guillén said.

Market cap matters, she argued, but shouldn't decide the outcome. "Big doesn't mean suitable, and small doesn't mean disqualified," Guillén said. "Digital assets shouldn't get special treatment, or be excluded because they use different technology."

Bernardo Brites, co-founder and CEO of Trace Finance, was blunter about how the six-factor test plays out in practice. "Run any token through that list and the answer is short. Bitcoin passes clearly. Ether passes; everything else fails on track record or benchmark before a fiduciary ever gets to market cap," he said.

For Brites, market cap matters only indirectly. "The practical test is simpler: can a plan committee document a daily, reliable price from a regulated wrapper?" he said. "If not, it is not going in."

Why ETFs will likely come first

The proposal doesn't restrict crypto exposure to exchange-traded funds or managed funds. Experts still expect wrappers to beat direct holdings to market.

"ETFs and managed funds will likely come first because they fit existing custody and recordkeeping systems," Guillén said. Direct crypto holdings would add storage, cybersecurity and pricing concerns, she said — though those risks shouldn't automatically rule direct custody out.

Brites laid out a gradual rollout: existing brokerage options first, then standalone ETFs and funds holding small crypto allocations. He expects some crypto investment options to appear in 2027, with ETFs at larger employers later that year, and broader availability across retirement funds by 2028.

"The rule changes the legal risk, not the plumbing, and the plumbing is slower," Brites said. "White House review can take up to ninety days, then publication, then an effective date typically sixty days later."

Can the rule survive politics?

Legal uncertainty could slow adoption regardless of the timeline. The proposal would give plan managers some protection from lawsuits, but it doesn't bar litigation over investment decisions outright.

Brites warned that a future administration could reverse the rule, a risk that could make employers wary of wiring crypto into long-horizon plans. "The 2022 guidance was reversed in 2025; a fiduciary signing a ten-year plan design has to consider that this rule could be reversed too," he said. "And with courts giving less deference to agencies, how much weight the safe harbor carries in litigation is itself unsettled."

With the White House review clock now running — up to 90 days, then publication and an effective date roughly 60 days after — the industry's first real signal on how many tokens qualify will come when plan committees, not regulators, start documenting prices.