Executive Summary

A bipartisan coalition of US lawmakers is urging the Securities and Exchange Commission (SEC) to implement a Trump-era executive order, potentially opening the $12.5 trillion 401(k) market to cryptocurrencies like Bitcoin, signaling significant institutional capital inflow. This push aims to democratize access to alternative assets for millions of American retirement savers.

The Event in Detail

On September 22, 2025, a bipartisan coalition of nine US lawmakers, including House Financial Services Committee Chairman French Hill and Subcommittee on Capital Markets Chair Ann Wagner, sent a letter to SEC Chair Paul Atkins. The letter pressed for the swift implementation of former President Donald Trump's executive order, "Democratizing Access to Alternative Assets for 401(k) Investors," signed on August 7, 2025. This order directs federal agencies, including the Department of Labor (DOL) and the SEC, to review and expand options for participant-directed retirement plans, specifically 401(k)s, to include alternative assets such as cryptocurrencies, private equity, real estate, and venture capital.

The executive order and the subsequent letter from lawmakers emphasize expanding access beyond accredited investor and qualified purchaser rules to benefit a broader demographic. The goal is to empower approximately 90 million Americans to diversify their retirement savings and potentially enhance net risk-adjusted returns. Key directives include the DOL reassessing fiduciary standards under ERISA guidelines to allow for the prudent inclusion of crypto, and the SEC updating regulations on digital asset securities and ETFs.

Financial Mechanics and Market Implications

The potential opening of the $12.5 trillion US 401(k) market to digital assets represents a significant financial development. Analysts project that even a modest 1% allocation to crypto could translate into $125 billion in inflows, with a 10% allocation potentially reaching $1.25 trillion. Furthermore, with roughly $50 billion entering these funds biweekly from payroll deductions, a sustained allocation to crypto—even at 1%, 3%, or 5%—could create recurring annual inflows ranging from $120 billion to $600 billion.

This initiative marks a reversal from the DOL's prior stance. In 2022, the DOL issued warnings against including crypto in 401(k) plans, citing fiduciary concerns. However, by mid-2025, the DOL rescinded this "extreme caution" guidance, admitting its previous approach deviated from historical neutral treatment of investment strategies. Ryan Rasmussen, Head of Research at Bitwise Asset Management, noted, "It was the first — and only — time the DOL singled out an asset class like this. Not even junk bonds or ESG funds." He added, "Once again, the US government admitted it had singled out crypto."

The SEC's recent approval on September 17, 2025, of generic listing standards for commodity-based Exchange-Traded Products (ETPs) further streamlines the approval process for crypto Exchange-Traded Funds (ETFs). This development is expected to facilitate the integration of digital assets into regulated financial markets and enhance investor access.

Broader Context and Expert Commentary

The legislative push aligns with broader efforts within the SEC to modernize digital asset regulation. SEC Chair Paul Atkins has outlined his vision for Project Crypto, aiming to provide clear regulatory frameworks and enable capital formation on-chain. Commissioner Hester Peirce continues to advocate for pro-innovation reforms, suggesting an expansion of the SEC's mission to include "innovation" and addressing regulatory considerations for Layer-2 blockchains.

Atkins has stated the SEC's commitment to "provide clear, predictable rules of the road so that innovators can thrive in the United States," and clarified, "Most crypto tokens are not securities, and we will draw the lines clearly."

Experts view this potential policy shift as transformational. Scott Melker, known as "The Wolf of All Streets," highlighted the long-term impact:

"Until now, the average American couldn't touch Bitcoin or Altcoins in a 401(k). Soon, they might be able to DCA and trade like a degen tax-free for decades. This isn't just policy — it's a paradigm shift."

This move aims to integrate digital assets into traditional retirement portfolios, potentially attracting fresh institutional capital, increasing market liquidity, and further cementing digital assets within mainstream investment. As of press time, the total crypto market capitalization stands at $3.82 trillion.