Original Author: KarenZ, Foresight News

On March 30, 2026, the U.S. Department of Labor released a 164-page proposed rule titled "Fiduciary Responsibilities in Selecting Designated Investment Alternatives." At the core of this document is the formal opening of alternative assets for the U.S. 401(k) market, which exceeds $10 trillion, with digital assets positioned right behind this door. Simultaneously, this proposed rule proactively establishes a legal firewall for fiduciaries.

This rule signals a complete reversal of the American regulatory stance. In March 2022, the Employee Benefits Security Administration (EBSA) under Biden issued a strongly worded advisory warning: "Exercise extreme caution" before considering adding cryptocurrency to 401(k) investment options. The document outlined five specific risk reasons: extreme price volatility, lack of judgment by participants, custodial and accounting risks, questionable valuation methods, and an uncertain regulatory environment.

The underlying implication was clear: if you add it, we will investigate you.

In May 2025, the same department under the Trump administration publicly rescinded that document, replacing it with a completely opposite rationale: cryptocurrencies are legitimate alternative investments, and fiduciaries can exercise their own judgment; the government provides no endorsement and does not obstruct.

In August of the same year, Trump signed Executive Order 14330 "Making Alternative Assets More Accessible to 401(k) Investors," incorporating digital assets into the category of alternative assets alongside private equity, real estate, commodities, and infrastructure financing. The executive order deliberately left room in its description of digital assets: it does not permit direct ownership of cryptocurrencies but rather involves allocating active management digital asset investment vehicles.

A Fence Enclosing $10 Trillion in Funds

To understand why this latest proposed rule is important, one must grasp what a 401(k) fence entails. The 401(k) is the most mainstream employer-sponsored retirement savings plan in the U.S., similar to China’s corporate annuity, but on a much larger scale. Further Reading: "Is the Pension Booster Ready? How Big is the 401(k) Market?"

According to the latest data from the Investment Company Institute, by the end of 2025, the total scale of U.S. retirement assets will reach $49.1 trillion, accounting for 34% of all U.S. household financial assets. Of this, IRA (Individual Retirement Accounts) accounts total another $19.2 trillion, and 401(k) plan assets amount to $10.1 trillion.

For a long time, this large sum has been invested almost exclusively in stocks and bonds. Despite the law not explicitly prohibiting alternative assets, more than 96% of 401(k), 403(b), and other defined contribution plans steer clear of them. The core reason is simple: fear of litigation.

Since 2016, there have been over 500 lawsuits related to fees for such plans, and the total amount paid out in settlements has exceeded $1 billion. The rational choice for fiduciaries has deteriorated to: seek no gains but avoid losses.

Safe Harbor: A Shield for Fiduciaries

The most substantive change in this new proposed rule is the introduction of a "safe harbor" mechanism.

The logic is simple: since fiduciaries (employers or those designated by employers) hesitate to act for fear of lawsuits, provide them with an operating manual; as long as they follow the steps, the court should presume their decisions are prudent, significantly compressing the leeway for plaintiff lawyers.

Specifically, the rule requires fiduciaries to conduct objective and systematic assessments across six dimensions when selecting investment options that include alternative assets:

• Performance: Must consider risk-adjusted long-term expected returns (e.g., Sharpe ratio), not just absolute returns.
• Fees: Alternative assets usually have higher fees; fiduciaries must demonstrate that high fees bring excess value (e.g., outstanding risk diversification capabilities).
• Liquidity: Pension accounts need to address employee borrowing, withdrawals upon leaving, and other needs at any time. Fiduciaries must ensure adequate liquidity management solutions.
• Valuation: Must ensure assets have an independent, conflict-free, timely valuation process (for non-publicly traded assets).
• Benchmarking: Must find a reasonable performance benchmark for the asset.
• Complexity: The new rules explicitly emphasize that if fiduciaries do not understand digital assets themselves, prudent processes require them to spend money on hiring professional third-party investment advisors.

This framework essentially transforms "prudence" from a vague moral standard into a checklist that can be ticked off.

There is one boundary that needs clarification. This safe harbor mechanism applies to "designated investment alternatives"—that is, the investment options screened and formally listed by the plan fiduciary. The original text explicitly excludes "self-directed brokerage accounts": investments chosen by participants through brokerage windows do not fall under this rule's safe harbor.

This distinction implies: In terms of listed options, crypto assets will not appear as "directly buying Bitcoin." A more realistic approach is to package them into an asset allocation fund—for example, a Target-Date Fund (TDF) that allocates part of its positions to actively managed funds investing in digital assets, thereby indirectly holding exposure through a combination.

Executive Order 14330’s description of digital assets employs exactly this structure: "actively managed investment vehicles investing in digital assets."

Not Just a Federal-Level Story

What’s even more noteworthy is the spillover effects of this policy shift.

While the federal level relaxes regulations, states are also following suit. On February 25, 2026, the Indiana state legislature passed a bill requiring certain state-sponsored retirement plans to offer at least one self-directed brokerage account entrance for cryptocurrency investments by July 1, 2027. States such as Texas, Florida, and Wyoming are also promoting the entry of digital assets into the public retirement system in their own ways.

From the industry perspective, the Department of Labor admits that there is currently not enough data to assess the number and scale of beneficiaries in private equity, hedge funds, and digital asset investment institutions, and it has specifically opened a comment collection channel to gather industry information.

The Department of Labor admits in the document that there is currently insufficient data to assess the number and scale of institutions marketing digital asset products to the 401(k) market and has specifically opened a comment collection channel to gather industry information.

When the world’s largest pool of long-term capital begins to systematically include cryptocurrencies as underlying assets under the protection of the law through scientific allocation models, it not only means a massive inflow of long-term, stable funds but also signifies the complete establishment of digital assets within the mainstream social credit system.

Of course, after the rule is published, it will enter a 60-day public comment period, after which the Department of Labor will revise it based on feedback and submit it for White House approval, ultimately formalizing it. The entire process may conclude by late 2026, or possibly later.

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