Crypto in Retirement Plans: What You Need to Know

Written by Chris Johnson

August 19, 2025

Crypto in Retirement Plans: What You Need to Know

Regulatory Update: A Major Shift in Direction

The Department of Labor (DOL) issued Compliance Assistance Release No. 2025-01 on May 28, 2025, formally rescinding its 2022 guidance that urged plan fiduciaries to exercise “extreme care” when including cryptocurrency, or “crypto,” in 401(k)/403(b) investment lineups. This shifts the landscape back to a neutral posture, while affirming that decisions should rest on facts and circumstances consistent with traditional ERISA fiduciary duties.
Meanwhile, an executive order issued on August 7, 2025, titled “Democratizing Access to Alternative Investments for America’s Workers,” calls on the DOL to clarify fiduciary standards around alternative assets (including crypto) within 180 days. It also tasks the SEC with revising rules to support broader participant access to such investments.

Table of Contents

What is Crypto Investing?

Crypto investing is the practice of buying, holding, or trading cryptocurrencies in digital assets like Bitcoin, US Coin, and others. Unlike traditional investments such as stocks or bonds, cryptocurrencies are decentralized, not issued by a government or central bank, and not corporate shares. Many have no financial backing.

Retirement investing in crypto usually involves accessing a 401(k), 403(b), or IRA, either directly or through a professionally managed fund. The advantages may include diversification and the potential for high returns. However, crypto also presents unique risks, such as price volatility, changing regulations, security concerns, and limited historical data.

When it comes to crypto in retirement, fiduciaries must carefully weigh the risks, ensure compliance with ERISA standards, and consider crypto as part of a balanced long-term investment strategy. Plan sponsors have a duty to educate participants about any crypto investments, how they work, and their pros and cons.
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What Plan Sponsors and Fiduciaries Should Know about Crypto in Retirement Plans

Prudence Is Essential

Fiduciaries must still act prudently, evaluating crypto investment vehicles through thorough research and risk assessment. There is a plethora of crypto investments. Which ones have financial backing? Which ones are driven by fevered speculation? Over time, which will win the race and which will become worthless? Given the nature of crypto investments, there are many pointed questions that should be answered.

Volatility, lack of long-term historical data, regulatory uncertainty, and potential liquidity issues make crypto a volatile investment. Although it can diversify a portfolio, it’s not suitable as a core retirement holding without careful planning. The retirement industry consensus on adding crypto to a retirement plan is that the amount a participant can invest should be capped at no more than about 10% of their account balance. This would be a good place to assert the philosophy of saving participants from themselves. As the market matures, that philosophy may change.

Watch for DOL Guidance by February 2026

The executive order requires the DOL to issue updated guidelines or regulations within 180 days of August 7, 2025, making February 4, 2026, a critical target date for new clarity on fiduciary duties around crypto and other alternative assets.

Operational Readiness Matters

Including crypto in retirement plans introduces investment, administrative, communication, and education complexities. Navia is considering the implications for custody, valuation, liquidity, fee transparency, technology infrastructure, and participant education. We must be sure that we have the compliance and administrative pieces in place to support this investment, and best practices in place to achieve that goal.

Client and Participant Takeaways

• Investment Policy Statements (IPS) May Require Updating
Introducing crypto in a retirement plan will require a review of the current IPS to ensure it permits alternative assets or to update it with specific evaluation criteria for crypto, such as risk-return assumptions, liquidity protocols, and fiduciary oversight.

• Consider Using Managed or Asset Allocation Funds
It may be more feasible to add crypto to a retirement plan via professionally managed target-date or multi-strategy funds, where fiduciaries rely on investment experts and an asset allocation framework rather than offering standalone crypto options. If this is an appealing approach for your organization, the plan’s financial advisor should be consulted.

• Offer Personalized Investment Accounts
At this point, very few participants ask about crypto as an investment option. If personalized investment accounts are not a current offering, a plan could adopt them. These vehicles provide participants with an account under the plan’s umbrella but have a much broader range of investments available. Keep in mind that if this option is made available to one participant, it must be available to all.

• Ensure Understandable, Transparent Participant Communication
Participants must understand crypto investments’ volatility, regulatory uncertainty, and risk-return profile. Clear disclosures and education are vital when adding crypto to an investment lineup, which can be challenging given its complicated nature. Examine the population’s demographics: Are they ready for crypto?

• Avoid Potential Conflicts of Interest
If a crypto company offers its own digital asset as a plan option, fiduciaries must be mindful of ERISA’s prohibited transaction rules and ensure any conflicts are addressed up-front.

How Navia Can Support

At Navia, we provide the compliance and administrative framework for employers navigating new investment frontiers. We will work closely with a plan’s investment advisor to help assess whether crypto is right for an organization now, not now, or never. Our team will help with planning, regulatory monitoring, recordkeeping, and participant education.

FAQs

1. Is cryptocurrency now allowed in 401(k) and 403(b) retirement plans?

Yes, the Department of Labor (DOL) rescinded its 2022 guidance in May 2025, shifting back to a neutral stance. This means fiduciaries can consider crypto investments as long as they meet ERISA’s prudence and loyalty standards. Final clarity is expected by February 2026 when the DOL issues new fiduciary guidance on alternative assets, including crypto.

2. What risks should fiduciaries consider before adding crypto in retirement plan investment lineups?

Crypto presents unique challenges such as price volatility, lack of long-term performance data, evolving regulations, and liquidity concerns. Fiduciaries must carefully research investment vehicles, set appropriate limits (such as capping crypto allocations at around 10% of an account balance), and ensure plan documents and investment policy statements are updated.

3. What are the best ways to offer crypto in a retirement plan?

Rather than offering standalone crypto investments, fiduciaries may consider adding crypto exposure through:
• Professionally managed target-date or multi-strategy funds
• Personalized investment accounts under the plan umbrella

Both approaches shift selection and oversight to investment professionals while ensuring ERISA compliance and broad participant access.

4. How should plan sponsors educate participants about crypto in retirement?

Clear, transparent communication is essential. Participants must understand crypto’s volatility, regulatory uncertainty, and risk-return profile. Fiduciaries should provide disclosures, targeted education, and demographic analysis to determine whether participants are ready for crypto. Avoiding conflicts of interest, such as offering a fund managed by the crypto company itself, is also critical.