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Over the past few decades, crypto has finally broken the ice, evolving from what was approached with heavy skepticism into a powerful alternative asset class for modern investors. One of the most recent studies from Fidelity suggests that the inclusion of crypto in a traditional 60/40 investment portfolio – comprising 60% equities and 40% bonds – has significantly increased both annual and cumulative returns over the long term (more than 2x in certain scenarios), with maximum drawdown not rising to the same extent and risk-adjusted metrics indicating that the added volatility was far compensated. It comes as little surprise that policymakers across the world are now debating the suitability of crypto for long-term investment strategies and retirement portfolios.
Historically, many retirement plan providers and pension fund managers have been reluctant to include crypto in retirement account. Concerns over volatility, investor protection, and regulatory uncertainty led many to postpone or reject decisions on integrating crypto offerings in retirement products. This cautious regulatory stance culminated in 2022 with the issuance of U.S. Department of Labor (DOL) Compliance Assistance Release No. 2022-01, which classified cryptocurrencies as highly speculative, high-risk assets and effectively created a barrier for crypto integration into retirement investment products.
However, the approach to crypto in retirement savings shifted in 2025 after President Donald Trump issued the Executive Order “Democratizing Access to Alternative Assets for 401(k) Investors,” enabling US residents to access alternative assets, including crypto, through their retirement plans. While not automatically forcing the inclusion of alternative assets, it enables fund managers to incorporate them where they believe the allocation can improve the portfolio’s risk-adjusted outcome. With 35% of current crypto owners already holding digital assets in retirement accounts and an additional 48% willing to consider it, according to Motley Fool Money’s 2026 survey, demand for crypto allocation within retirement portfolios is expected to continue growing exponentially.
At the same time, while this strengthened the market’s growth potential, this shift raised serious legal, regulatory, and financial concerns, with multiple industry experts warning against the use of crypto in retirement savings portfolios. With both the opportunity and the concerns now on the table, this article provides an overview of the possible benefits of investing in crypto for retirement, the risks involved, and the legal framework those interested should understand before committing.
Trump’s Executive Order: Democratizing Access to Alternative Assets
A typical American 401(k) has been built around a traditional mix of public stocks and bonds (less frequent: cash investments) as investment vehicles long accepted worldwide. While these traditional assets remain the foundation of most retirement plans, they have long excluded alternative assets that institutional investors have relied on for years, such as private equity, private credit, real estate, and, more recently, digital assets.
With President Donald Trump’s executive order, the country has become one step closer to achieving the so-called “American Dream” by reducing regulatory barriers that have limited retirement plan providers from offering alternative investments and allowing everyday Americans to access asset classes that have been hitherto reserved for pension funds and high-net-worth individuals (HNWIs).
Reportedly, as of 2024, US pension funds allocate 32% of their portfolios (33.9% according to other estimations) to alternative assets, while the average 401(k) investor has no exposure beyond publicly traded securities. The executive order seeks to close that gap, giving individual retirement savers access to the same categories of assets many institutional investors have used for decades to accumulate their wealth. Under section 3(c) of this executive order, the U.S. Department of Labor (DOL) has been instructed to:
- reexamine its existing guidance on fiduciary duties as they relate to alternative assets, including crypto, in Employee Retirement Income Security Act (ERISA) plans;
- within 180 days (i.e., by February 2026): clarify its past and present guidance regarding a fiduciary’s duties under ERISA;
- and prioritize actions that may curb ERISA litigation that constrains fiduciaries’ ability to apply their judgment in offering investment opportunities to relevant plan participants.
Source: Equable
When Will Trump’s Executive Order Take Effect?
Since the issuance of the Executive Order on August 7, 2025, the relevant regulatory authorities have begun moving toward its practical implementation. It is expected to come into full force by the end of 2026, though the timeline is not guaranteed and could extend into 2027 depending on multiple factors. Until then, retirement account fiduciaries can technically add alternative assets to 401(k)s but remain without the litigation-risk protection, so meaningful inclusion is likely to stay gradual and modest until then.
UPDATE: On March 30, 2026, DOL released a proposed rule (Proposed Rule) providing guidance on how retirement fund management service providers should select investment options for 401(k) retirement plans. Since selecting investment options is a fiduciary act under ERISA, retirement plan providers must make decisions with participants’ interests at the forefront and satisfy the duty of prudence. Although retirement plan providers now enjoy greater flexibility in selecting which assets may be included in retirement portfolios, any decision to add alternative investments – such as private equity, real estate, commodities, or cryptocurrencies – must be properly documented and demonstrate compliance with the applicable duty of prudence.
Notably, the Proposed Rule introduces a six-factor rule for assessment of compliance with the duty of prudence, a so-called “safe harbor” framework. Under this framework, retirement plan providers should evaluate crypto investment options in an objective, thorough, and analytical manner while taking into account such facts as risk-adjusted performance, fees and expenses, liquidity, valuation, benchmarking, and complexity.
Overall, the Proposed Rule aims to reduce legal uncertainty and give retirement plan providers greater confidence in offering a broader range of investment options. At the same time, while the order does not mandate retirement savers to invest in cryptocurrencies and keeps participation fully voluntary, the Trump administration has effectively opened the door for crypto to become a legitimate element of retirement portfolios alongside stocks and bonds. Whether this leads to broad market adoption will depend on future regulatory guidance and the willingness of plan providers and fund managers to soften their stance on crypto. Nevertheless, the major shift is already evident.
Benefits of Holding Crypto in Retirement Accounts
Even though most institutions still treat cryptocurrencies as high-risk investments, their enormous long-term potential is gaining more and more attention, especially for retirement savings intended to grow over more than 10 years. Although the crypto market remains volatile and can experience sharp price declines during periods of uncertainty, many private investors have long added a modest crypto allocation to achieve greater diversification and inflation protection.
Even a small allocation to crypto may bring notable benefits to retirement-focused portfolios, with various sources suggesting an optimal allocation of 1%–3% or up to 6%, in certain cases, for better risk-adjusted returns.
|
Benefits
|
Risks
|
|---|---|
|
Higher returns
|
High volatility
|
|
Portfolio diversification
|
Recordkeeping and cybersecurity risks
|
|
Growing institutional interest due to rising regulatory clarity
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Regulatory uncertainty
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Industry's revolutionary potential
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Complex in understanding
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Taxation advantages
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1. Potential of Greater Returns
No major asset class has generated returns comparable to Bitcoin over the past decade. Since 2013, Bitcoin “has been the best performing asset class in 9 out of the past 13 years,” according to VanEck, growing by the annual average of 628.43%, more than any other asset class, significantly outperforming US equities, gold, bonds, and real estate over the same period.
|
|
US Bonds
|
Bitcoin
|
US Equities
|
EM Equity
|
Gold
|
Real Estate
|
Commodity
|
Treasuries
|
|---|---|---|---|---|---|---|---|---|
|
2016
|
2.65%
|
124.07%
|
11.96%
|
11.58%
|
8.63%
|
5.32%
|
11.77%
|
1.04%
|
|
2017
|
3.54%
|
1622.86%
|
21.83%
|
38.44%
|
13.68%
|
18.73%
|
1.70%
|
2.31%
|
|
2018
|
0.01%
|
-72.31%
|
-4.38%
|
-13.58%
|
-2.14%
|
-6.77%
|
-11.25%
|
0.86%
|
|
2019
|
8.72%
|
86.38%
|
31.49%
|
20.72%
|
18.87%
|
25.92%
|
7.69%
|
6.86%
|
|
2020
|
7.51%
|
293.38%
|
18.40%
|
17.54%
|
24.42%
|
-5.42%
|
-3.12%
|
8.00%
|
|
2021
|
-1.54%
|
67.23%
|
28.71%
|
-1.48%
|
-3.51%
|
22.06%
|
27.11%
|
-2.32%
|
|
2022
|
-13.01%
|
-65.05%
|
-18.11%
|
-18.62%
|
-0.13%
|
-24.42%
|
16.09%
|
-12.46%
|
|
2023
|
5.53%
|
156.62%
|
26.29%
|
12.60%
|
13.45%
|
9.32%
|
-7.91%
|
4.05%
|
|
2024
|
1.25%
|
122.39%
|
25.02%
|
6.80%
|
27.47%
|
1.10%
|
5.38%
|
0.58%
|
|
2025
|
7.30%
|
-6.85%
|
17.88%
|
36.70%
|
64.37%
|
10.20%
|
15.77%
|
6.32%
|
|
Avg. Annual Return (2013-2025)
|
2.04%
|
628.43%
|
15.89%
|
7.40%
|
9.61%
|
5.58%
|
1.09%
|
1.41%
|
Annual return of different asset classes (2016-2025)
Source: VanEck
While past performance never guarantees future returns, many experts believe digital assets will continue to gain more attention from institutional investors, seeing them as a high-growth asset class capable of enhancing long-term portfolio performance.
2. Portfolio Diversification
One of the greatest reasons to invest in crypto is its historically low long-term correlation with traditional asset classes. Although digital assets generally tend to move in tandem with equities (public stocks) during periods of stress and market uncertainty, their prices are also driven by many unique factors, including blockchain adoption, technological innovation, regulatory development, and tokenization demand.
Effectively, a small crypto allocation has the potential to improve diversification rather than simply increasing the exposure to the same risks affecting stocks and bonds.
Revolutionary Innovation Breakthrough
For many investors, purchasing cryptocurrency is about more than simply pursuing returns; it’s a strategic long-term investment in the evolution of global finance and banking. The blockchain technology continues to reshape payments, asset tokenization, decentralized finance (DeFi), and digital ownership, while governments (e.g., in the EU) and financial institutions increasingly explore tokenized securities and central bank digital currencies (CBDCs).
At the same time, growing regulatory clarity and a more mature market environment are driving greater institutional confidence in the crypto market, helping accelerate broader market adoption. Reportedly, according to the 2026 Institutional Investor Digital Assets Survey by Ernst & Young (E&Y), 73% of institutional investors plan to increase their allocations to digital assets this year, expecting the prices to rise, with 65% of them citing greater regulatory clarity as a key catalyst.
Source: Ernst & Young (E&Y)
Investing in crypto for retirement, as such, allows investors to participate in this long-term structural transformation together with the institutions traditionally known for amassing wealth for clients.
4. Tax Reporting Simplified
In a traditional IRA retirement savings account, investments generally grow on a tax-deferred basis, meaning capital gains and trading activity typically do not trigger any taxes. When held in crypto IRA accounts, digital assets are not subject to any taxes or income from holding; they will become taxable upon exchange or withdrawal during retirement, which can simplify tax management and improve overall investment efficiency.
Risks Associated with a Cryptocurrency Retirement Account
While crypto offers high upside potential and portfolio diversification while growing in acceptance among institutions, adding crypto to one’s retirement plan carries fundamentally different risks than when investing in your 20s. Unlike traditional instruments in retirement accounts, crypto’s structural vulnerabilities can have irreversible consequences for the long-term financial security of a retiree.
Before adding digital assets to a retirement portfolio, investors seeking to preserve and accumulate their wealth over the decades, as they invest in retirement plans, should carefully understand the challenges that accompany this asset class.
1. High Market Volatility
Cryptocurrencies are highly volatile and often driven by speculative market forces. Price swings of 10% or more within a single day are usual for this market; consequently, holding crypto can result in significant gains but also substantial losses over short periods.
Historically, crypto has experienced sharp declines, with Bitcoin and Ethereum experiencing multiple deep drawdowns exceeding 70% over the past 10 years, while traditional markets like stocks, bonds, gold, and real estate have all shown relatively lower volatility.
Such fluctuations can be particularly risky for individuals approaching retirement, as emotional pressure can lead to withdrawal during downturns and expose retirement savings to significant losses that may be difficult to recover from.
2. Recordkeeping and Cybersecurity Risks
Unlike traditional financial assets, cryptocurrencies are held and stored only within digital space, where access to the portfolio depends on the secure management of private keys and authentication credentials by wallet providers. That’s why holding crypto through retirement managers introduces risks that are largely absent from traditional retirement investments, including cyberattacks, data breaches, and the permanent loss of assets due to compromised accounts or lost credentials.
While many retirement platforms use institutional-grade custody solutions, cybersecurity threats remain important, given cryptocurrency-related thefts and exploits accounting for approximately USD 3.41 billion during 2025, as per Chainalysis. Although regulated custodians significantly reduce these risks, they cannot eliminate them entirely.
3. Regulatory Uncertainty
The regulatory landscape for digital assets evolves every day, with governments regularly updating rules around taxation, custody, and even retirement plan investment. Although recent policy initiatives have all shown greater openness toward digital assets in retirement accounts, future administrations or regulators may adopt different approaches, with investors expecting regulatory developments to remain an ongoing source of uncertainty.
At its core, this is a double-edged sword: immense potential on one side and significant risk on the other. Even for institutional investors who deem greater regulatory certainty as one of the core drivers to increase allocation to digital assets, regulatory uncertainty remains the primary barrier to investing for a majority of them (66%).
4. Complexity and Accessibility
Unlike traditional investment instruments, crypto remains relatively new, functioning within a still-maturing ecosystem where technology, market infrastructure, and regulatory expectations continue changing rapidly. Estimating the potential of crypto assets for a retirement account requires analyzing beyond price performance or market trends; the factors to be considered include their underlying technology, custody structure, liquidity profile, the applicable regulatory environment, and a clear idea of their role within a diversified investment portfolio.
This level of complexity creates additional fiduciary and operational responsibilities, requiring decision-makers to develop the expertise needed to assess volatility, correlations with traditional assets, cybersecurity risks, and transaction costs in accordance with the duty of prudence. Those seeking to invest in crypto for retirement may also struggle to find qualified professionals with the relevant expertise to advise on the appropriate crypto allocation in one’s retirement account and support its effective ongoing management.
Crypto in Retirement Savings: Key Legal and Regulatory Considerations
Unlike stocks, bonds, or mutual funds, crypto sits in a rapidly evolving legal and regulatory landscape, where governments continue developing rules governing their use in retirement accounts. What makes the situation even more difficult is the lack of unified global rules, leaving each jurisdiction to set its own rules independently and making the landscape largely fragmented. As a result, individuals seeking to include crypto in their retirement plans must navigate an increasingly intricate regulatory and tax environment, where even minor oversights may lead to unexpected liabilities and risks that may ultimately affect their retirement future.
1. Tax Reporting Obligations (IRS)
Recent legislative changes have significantly expanded tax reporting requirements for digital assets.
Under amendments to the Internal Revenue Code §6045 introduced by the Infrastructure Investment and Jobs Act in 2021, brokers, including retirement account managers, are now required to report any cryptocurrency purchased, sold, transferred, or exchanged to the Internal Revenue Service (IRS), an agency responsible for collecting federal taxes.
While crypto generally enjoys tax-free treatment within qualified retirement accounts, reporting obligations still arise when funds are distributed. At the same time, however, investors should take into account that a capital gain may arise once the relevant assets are sold, exchanged, transferred, or otherwise realized.
Kindly note: The information outlined above is limited to the treatment of crypto in retirement plans in the United States. Investors considering crypto in retirement savings are recommended to exercise jurisdiction-specific due diligence of the applicable local tax and reporting obligations, which may differ considerably from one country to another, before proceeding.
2. Fiduciary Duties under ERISA
Providers of retirement plans such as 401(k) are subject to strict duty of care and prudence standards under ERISA.
This means that any provider’s decision to include alternative assets or crypto in retirement account must be made in the participant’s best interests against factors such as expected investment performance, associated fees and expenses, liquidity characteristics, valuation methodology and growth potential, exit considerations, performance benchmarks, and the provider’s overall understanding of the investment. Moreover, such estimations must be declared in a separate risk estimation document up to all applicable standards.
3. Limited Regulatory Protections
The regulations governing cryptocurrencies are not generally unified and remain fragmented across jurisdictions. As a result, investor protections, disclosure standards, and supervisory mechanisms applicable to digital assets are not yet as well-established or uniform as those governing traditional retirement investments.
Without the legal consumer safeguards typical for traditional assets, crypto investors are highly vulnerable to extreme market volatility and lack protection against cyberattacks, meaning stolen or lost assets are rarely recovered. In this regard, investors should generally understand who controls private keys, how assets are stored, whether insurance protections exist, and what safeguards are in place against cyberattacks or operational failures.
The Future of Crypto in Retirement Plans
Only a few years ago, the idea of holding crypto in a retirement account seemed a long-distance dream. Today, major financial institutions such as Morgan Stanley are opening access to crypto in retirement plans, policymakers are rewriting decades-old frameworks, and retirement plan providers are actively evaluating the best ways to add alternative assets such as crypto to a traditional portfolio of stocks and bonds.
Yet, the industry remains divided on what comes next. On the one hand, the measure advocates believe digital assets are the next evolution of retirement savings, with the US Labor Secretary saying, “This greater diversity will drive innovation and result in a major win for American workers, retirees, and their families.” Critics, however, remain very skeptical, arguing an asset capable of losing 45% four times over the 5 years ending in 2024 fundamentally conflicts with the stability requirements of a retirement vehicle. “This is exactly the wrong approach at the wrong time,” said Benjamin Schiffrin, director of securities policy for Better Markets.
The most likely outcome is that rather than replacing traditional retirement portfolios, cryptocurrency will become another optional asset class to add, similar to gold, private equity, or real estate. Access is likely to expand gradually over time, accompanied by strict custody requirements, enhanced disclosure standards, and greater regulatory oversight. In other words, the future of crypto in retirement accounts will depend not on market enthusiasm alone but more on clear rules, reliable oversight, and adequate investor safeguards.
Whether establishing a crypto investment platform, creating retirement products with digital-asset exposure, or entering the crypto market with a highly innovative business model, modern businesses can easily rely on Inteliumlaw for qualified and tailored legal assistance in building a sustainable project. Our team advises crypto and blockchain companies with corporate structuring; AML/KYC policy development; whitepaper production; licensing in selected digital asset hubs; ongoing regulatory compliance; and other cross-border legal matters.
Contact Inteliumlaw to start a compliant crypto business and navigate the complex digital asset regulatory landscape with legal confidence.
