U.S. Labor Department floats rule that could open 401(k)s to crypto and private assets

The U.S. Department of Labor has unveiled a proposal that would make it easier for 401(k) retirement plans to offer investments such as cryptocurrencies and private-market assets, a shift that could broaden choices for savers while intensifying debate over risk, valuation and liquidity. Reuters reports the proposal would clear away long-standing hurdles that have largely kept private equity, private credit and digital assets out of most workplace retirement portfolios. The effort follows an executive order issued by President Trump last year and comes as demand for alternative investments continues to build. The rule would not require any plan to add crypto or private assets. Instead, it lays out a framework for plan fiduciaries. Trustees would be expected to evaluate fees, liquidity, performance and overall risk before introducing these options. Officials say the aim is to give managers a defined process; fiduciaries that adhere to the guidance would receive legal protection from lawsuits tied to investment-selection decisions. Large asset managers including Blackrock, Apollo and KKR have supported the move, arguing that expanded access to private markets could improve diversification and potentially boost long-term returns. Skeptics warn the trade-offs are significant. Private assets and cryptocurrencies can be volatile, difficult to price and less liquid than traditional holdings. Senator Elizabeth Warren criticized the approach as exposing retirement savings to "risky assets" amid market uncertainty. Recent strains in private credit markets have also underscored liquidity risks, with some funds facing withdrawal pressure. The proposal now moves into a 60-day public comment period. Regulators will then decide whether to finalize the rule. Even if adopted, market participants expect a gradual rollout as plan providers weigh operational complexity, costs and whether such investments are suitable for retirement savers. Key questions - What does the proposal do? It would allow 401(k) plans to consider alternative assets such as crypto, private equity and private credit. - Will every plan add crypto? No. Plan sponsors would choose whether to include these investments. - Why the concern? Critics cite volatility, valuation challenges, higher costs and liquidity constraints. - When could it take effect? After the 60-day comment period and a subsequent decision on whether to finalize the rule.