A proposed US Labor Department rule could allow smaller cryptocurrencies into 401(k) retirement plans, but eligibility would not guarantee inclusion. Experts cited by Cointelegraph said investment-selection standards, operational constraints and legal uncertainty could favor Bitcoin and Ether over smaller tokens.
Original publication: November 7, 2026, at 04:04:27 UTC+08:00. The proposal was still under review at the time of the report.
No minimum market cap, but six selection factors
According to the Office of Information and Regulatory Affairs, the proposal reached the White House for final review on Thursday. It aims to make it easier for retirement plans to offer alternative investments, including crypto, while providing greater legal protection for employers and plan managers.
The Labor Department’s March proposal does not specify eligible digital assets or impose a minimum market capitalization. Instead, it directs plan managers to consider six factors: performance, fees, liquidity, valuation, benchmarks and complexity.
Teresa Goody Guillén, managing partner at Bellementis PLLC, said Bitcoin and Ether would likely be offered first because of their established markets and investment products. According to CoinGecko data cited in the report, their market capitalizations were approximately $1.5 trillion and $273 billion, respectively, as of 20:01 UTC on November 6.
That does not automatically exclude smaller cryptocurrencies, Guillén said. Plan managers would still need to demonstrate that their choices meet appropriate investment standards.
“Big doesn’t mean suitable, and small doesn’t mean disqualified,” she said. “Digital assets shouldn’t get special treatment, or be excluded because they use different technology.”
Bernardo Brites, co-founder and CEO of Trace Finance, offered a more restrictive assessment. In his view, Bitcoin and Ether meet the proposed criteria, while other tokens fall short on track record or benchmarks before market capitalization becomes relevant. He said a practical requirement would be whether a plan committee could document a reliable daily price through a regulated investment wrapper.
Funds could precede direct holdings
The proposal does not restrict crypto exposure to exchange-traded funds or managed funds. Nevertheless, Guillén said those products would likely come first because they fit existing custody and recordkeeping systems.
Direct crypto holdings would introduce additional storage, cybersecurity and pricing concerns, she said, while cautioning that those risks should not automatically disqualify them.
Brites also expected a gradual rollout: existing brokerage options first, followed by standalone ETFs and funds with small crypto allocations. He projected that some options could become available in 2027, with ETFs at larger employers later that year and broader availability in retirement funds by 2028. Those dates were his expectations, not an implementation schedule established by the proposal.
“The rule changes the legal risk, not the plumbing, and the plumbing is slower,” Brites said. He added that White House review could take up to 90 days, followed by publication and an effective date typically 60 days later.
Legal protection would not eliminate litigation risk
Brites said the proposal would give plan managers some protection from lawsuits without preventing challenges to their investment decisions. He also warned that a future administration could reverse the rule, potentially discouraging employers from adding crypto to long-term retirement plans.
He pointed to the reversal in 2025 of guidance issued in 2022 and said the weight courts would give the proposed safe harbor remained unsettled as courts afforded agencies less deference.
The distinction is between permitting crypto investments and making them available in a retirement plan. Even if the rule takes effect, employers and plan managers would still need to assess suitability, implementation and legal risk.