A Republican congressman is seeking to codify former President Donald Trump's executive order on cryptocurrency and 401(k)s into law. Representative Troy Downing of Montana introduced the Retirement Investment Choice Act, a bill that aims to cement Trump's directive, which encourages 401(k) providers to offer exposure to crypto and other alternative assets.
Trump's initial executive order, signed in August, directed the Labor Department (DOL) and other agencies to explore ways to allow investments in crypto, private equity, and other alternative assets in 401(k) retirement plans. This move was a departure from the previous Biden administration, during which the Labor Department raised concerns about the risks associated with cryptocurrency investments in retirement plans. The Biden administration feared that crypto's potential for outsized returns could cloud investors' judgment and attract inexperienced investors. Subsequently, the Trump administration reversed this stance.
Downing's bill seeks to add "more permanency" to Trump's executive order. He stated that alternative investments hold the potential to significantly enhance the financial security of Americans saving for retirement. He also applauded Trump's leadership in democratizing finance and expressed his pride in leading the effort to codify the executive order. The bill has four Republican co-sponsors: Representatives Byron Donalds, Buddy Carter, Warren Davidson, and Barry Moore. As of today, there is no Senate version of the bill.
The executive order directed the DOL, the Securities and Exchange Commission (SEC), and the Treasury Secretary to review and issue guidance for 401(k) plans within six months, potentially paving the way for integrating crypto assets into retirement portfolios.
The inclusion of alternative assets, such as cryptocurrencies, in retirement plans has garnered support, though concerns about market volatility persist. Some analysts express worry that allowing cryptocurrency in 401(k) contributions could introduce a high degree of risk, considering crypto's speculative nature and history of fraud. Anil Khurana, executive director of Georgetown University's Baratta Center for Global Business, stated that opening up the $9 trillion 401(k) industry to alternative assets is reasonable overall, but it could be a significant mistake if these assets and sectors are highly speculative and underregulated.
Conversely, experts believe that allowing crypto in 401(k) plans could attract billions in new investments. Andre Dragosch, head of research at Bitwise, suggested that the inclusion of cryptocurrency could mark a major step for Bitcoin adoption.
If enacted, the Retirement Investment Choice Act would permanently authorize 401(k) providers to include crypto-exposed products alongside traditional funds, potentially unlocking billions of dollars in new flows to Bitcoin and other digital assets. This policy shift could significantly impact millions of Americans, given the substantial amount held in 401(k) accounts.
BlackRock's spot Bitcoin ETF (IBIT) became the fastest fund ever to reach $10 billion in assets after launching in January 2024 and now holds nearly $100 billion. This milestone underscores the growing interest in digital assets and their potential role in investment portfolios.
