White House Move Could Open 401(k)s to Crypto — But Expert Warns It Requires Modernization
A new White House order to expand alternatives in retirement plans could soon allow cryptocurrencies into 401(k)s.
The development comes as 60% of younger workers have less than $5,000 saved for retirement, while 28% of Americans already hold crypto outside retirement accounts—often without safeguards or tax benefits.
For Gen Z, digital assets are often the first step into investing. But according to Margaret Rosenfeld, Chief Legal Officer at Everstake, bringing crypto into retirement plans responsibly requires far more than simply adding another investment option. She emphasized that it will take an overhaul of the rules, technology, and safeguards if digital assets are to fit seamlessly into the retirement system.
Rosenfeld’s Three Priorities for Crypto in 401(k)s
1. Define Standards for “Prudent†Digital Assets
Rosenfeld explained that the ERISA “prudent man†standard was created for traditional assets like stocks and bonds, not for blockchain-based assets.
She argued that regulators need to establish a safe harbor for retirement-ready digital assets, with benchmarks for liquidity, transparent pricing, institutional custody, and cybersecurity.
Independent risk ratings, she added, could help fiduciaries properly document their due diligence.
2. Modernize Custody and Staking Rules
Rosenfeld pointed out that crypto is not simply a buy-and-hold investment—it can also generate income through staking.
However, existing custody rules do not account for private keys, multi-signature wallets, or staking mechanics.
She said regulators should recognize modern custody methods such as multi-party computation (MPC), require insurance against theft or slashing events, and allow staking in 401(k)s through non-custodial validators.
Aligning tax treatment is also critical, she argued, suggesting that staking rewards should be taxed when withdrawn from retirement accounts rather than when earned on-chain.
3. Upgrade Retirement Infrastructure
Rosenfeld also noted that the “plumbing†of the current retirement system is not designed for the unique features of digital assets, such as forks, airdrops, or real-time volatility.
She argued that recordkeeping systems need to be updated to track on-chain events automatically, and that regulators like the SEC and Department of Labor should provide coordinated guidance so that plan sponsors can operate under a consistent rulebook.
Why It Matters
Rosenfeld cautioned that if policymakers fail to modernize the retirement system, crypto will remain largely outside of it—leaving millions of Americans without critical protections. She also warned that younger workers are increasingly opting out of 401(k) plans altogether, giving up long-term tax advantages and the benefits of compounding.
On the other hand, Rosenfeld believes that responsibly integrating crypto into retirement accounts could bring younger savers back into the system and even encourage older generations to diversify a portion of their portfolios into digital assets. This, she argued, could create a bridge between traditional finance and the digital economy.
Rosenfeld concluded that the discussion is not about simply adding a new investment choice, but about building a retirement system that reflects how people are already investing today. In her view, integrating crypto into 401(k)s responsibly could give the next generation of savers both the innovation of digital assets and the guardrails of a 401(k).
