The Department of Labor (DOL) has issued a proposed regulation that would allow retirement plans to include investments in alternative assets, specifically cryptocurrencies and private markets.
“The overarching goal of the proposed regulation is to alleviate certain regulatory burdens and litigation risk that interfere with the ability of American workers to achieve, through their retirement accounts, the competitive returns and asset diversification necessary to secure a dignified and comfortable retirement,” the executive summary reads.
The proposal comes after President Donald Trump‘s executive order, released last year, instructed the DOL to reexamine its guidance surrounding employers and plan administrators on incorporating these assets into retirement plans.
“The Executive Order (E.O. 14330) pointed out that, currently, many Americans in employer-sponsored defined contribution plans do not have the opportunity to participate in the potential growth and diversification opportunities offered by alternative asset investments,” the proposal stated.
DOL Safe Harbor Rule
The DOL has introduced a “safe harbor” rule designed to help shield plan sponsors from lawsuits. Under the guidance, fiduciaries must carefully weigh six key factors when selecting alternative investments: performance, fees, liquidity, valuation, benchmarks, and complexity.
The rule will undergo additional review, including a 60-day period for public comment, before it can be finalized.
“Americans’ ability to participate more fully in innovation and economic growth through well-diversified long-term investments is a vitally important priority for effective retirement planning. We look forward to continuing our work to expand opportunities for Americans to build wealth and save for the future,” said SEC Chairman Paul S. Atkins in a press release.
U.S. Secretary of the Treasury Scott Bessent commented that the proposed rule is “an initial step” in implementing the Trump’s Executive Order in “a safe and smart manner.”
Last Wednesday, the Labor Department lifted restrictions that had previously discouraged the inclusion of cryptocurrencies in 401(k) retirement plans.
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