House Panel Urges SEC to Fast-Track Crypto 401(k) Access

The push, led by Committee Chairman French Hill and Subcommittee on Capital Markets Chairman Ann Wagner, represents a concerted effort to translate policy into practice. The letter applauds the core principle of Trump’s August 7 executive order, stating that “Every American preparing for retirement should have access to funds that include investments in alternative assets when the relevant plan fiduciary determines that such access provides an appropriate opportunity to enhance the net risk-adjusted returns.” This sentiment underscores a belief that carefully managed exposure to assets like Bitcoin (BTC) and Ethereum (ETH) could bolster long-term savings.

The lawmakers specifically encouraged the SEC to assist the Department of Labor (DOL) in making necessary revisions to regulations and guidance for participant-directed plans. A key request involves the SEC’s review of bipartisan legislation concerning accredited investor definitions that was advanced in the 119th Congress. The executive order itself directs the Labor Secretary to consult with the SEC to determine parallel regulatory changes, potentially including modifications to accredited investor and qualified purchaser statuses, which could broaden the pool of eligible crypto investors.

The potential impact of this regulatory shift is enormous, given the scale of the U.S. retirement savings system. As of March 31, the defined-contribution market held assets of $12.2 trillion, with $8.7 trillion residing specifically in 401(k) plans. The letter’s signatories, who also include Representatives Frank Lucas, Warren Davidson, Marlin Stutzman, Andrew Garbarino, Michael Lawler, Troy Downing, and Mike Haridopolos, highlight that even modest allocations could unlock substantial capital flows into cryptocurrency.

Analysis cited in the communication outlines a range of scenarios. A minimal 0.1% default allocation across just 10% of plans would generate $1.22 billion in crypto investment flows through systematic payroll contributions and employer matches. Broader adoption could see flows ranging from $15.3 billion (with 0.5% defaults across 25% of plans) to a staggering $61 billion if 1% defaults were implemented across half of the massive 401(k) market.

This executive order builds upon a critical prior action: the Labor Department’s May 28 rescission of its 2022 compliance release, which had warned fiduciaries to exercise “extreme care” when considering cryptocurrency in investment menus. By overturning this cautious stance, the administration has cleared a significant ideological hurdle. The practical distribution of crypto exposure is expected to run primarily through target date funds and collective investment trusts, which are the default vehicles for the majority of participant contributions.

However, the journey from policy to portfolio is not instantaneous. The letter, which was also copied to Ranking Member Maxine Waters and Subcommittee Ranking Member Brad Sherman, acknowledges that implementation now hinges on a series of procedural steps. These include the issuance of detailed agency guidance from the SEC and DOL, the filing and approval of new financial products, and complex technical integrations by recordkeepers. Only after these steps can plan committees formally update their investment policy statements to permit cryptocurrency allocations, making regulatory speed a primary concern for the lawmakers.