Crypto's 401(k) Eligibility Faces Scrutiny After $2 Trillion Market Crash
By John Nada·Feb 6, 2026·3 min read
Crypto's eligibility for 401(k) plans is under scrutiny after a $2 trillion market crash. Experts debate the risks of including volatile digital assets in retirement funds.
Crypto's eligibility for 401(k) retirement funds is under fire after a brutal market rout wiped out $2 trillion. Lee Reiners, a lecturing fellow at the Duke Financial Economics Center, stated, "401ks exist to help people save for a secure retirement, not gamble on speculative assets with no intrinsic value." Bitcoin’s 50% plunge from its October peak has reignited debate over the fiduciary math of the American retirement system. Investors are now questioning whether volatile digital assets belong in a $12.5 trillion 401(k) market designed for stability.
U.S. President Donald Trump had previously issued an executive order allowing access to alternative assets, including digital assets, in 401(k) and other defined-contribution retirement plans. Even SEC chair Paul Atkins suggested that “the time is right” for crypto in the retirement market. However, the recent crash may deter retirement fund managers from adding crypto to 401(k)s.
Reiners noted that several large crypto companies, such as Coinbase, are already part of major equity indices, providing 401(k) plans with indirect exposure to crypto. He added, "Unless Congress changes the law, plan sponsors are unlikely to include crypto, or ETFs, as plan options because they don't want to be sued by their employees."
The problem with integrating crypto into retirement plans lies in its volatile nature. While traditional investments like the S&P 500 can experience large swings during crises, they benefit from regulatory oversight. The crypto market, however, operates largely on speculation, leading to drastic price movements without similar protections.
Maximilian Pace, Chief Technical Officer at BlockTrust IRA, explained that many firms were caught off guard by the sudden market downturn. He shared that the firm added $70 million in IRA funds over the past year but struggled to exit positions quickly during the crash. Pace emphasized a long-term approach to crypto investments, suggesting that investors should think like venture capitalists rather than day traders.
Additionally, there's a growing conversation about the role of blockchain technology in retirement investment management. Robert Crossley, Franklin Templeton's global head of industry and digital advisory services, proposes that the retirement industry could be transformed by onchain wallets that manage tokenized assets. This innovation could align individuals' digital wealth with their financial activities across their lives.
Crossley noted that if regulations permit, blockchain technology could reduce reliance on intermediaries, unlocking the potential for programmable assets. He stated, "When something becomes tokenized, it becomes software. That software can be an asset, but it also could be a benefit, it also could be a liability."
In summary, the recent market upheaval has cast doubt on the integration of crypto into retirement funds. With calls for stability in 401(k) investments, the future of digital assets in this space remains uncertain. The implications for investors are clear: the volatility of crypto might be too risky for retirement savings, pushing fund managers to reconsider their options.