Crypto Experts Back Limited Bitcoin Exposure in 401(k) Plans

The debate intensified after Democratic lawmakers criticized a reported Trump administration proposal that would make it easier for 401(k) plans to offer investments tied to cryptocurrencies and other assets.

Sen. Bernie Sanders, Sen. Elizabeth Warren and Rep. Rep. Bobby Scott argued in a letter shared with The Guardian that retirement accounts should remain focused on traditional investments and warned against allowing access to cryptocurrencies, private equity and private credit.

"This would strip long-held investor protections from retirement savers and encourage the use of more risky, complex, and expensive investments," the letter reportedly reads. "The proposed rule is harmful to American workers."  

Volatility concerns may be overstated

Christian St. Louis, investment partner at Ethereal Ventures, told Sandmark that while Bitcoin (BTC) has historically been more volatile than stocks and has experienced deeper price declines than major indexes such as the S&P 500, the gap has narrowed as the asset has matured.

He explained that 401(k) options already contain plenty of high-volatility options. "Single-stock company holdings, sector funds, emerging-market funds… even concentrated positions in individual tech names have at times swung harder than Bitcoin," he said. "So why should we treat this volatility differently from the volatility that is already permitted?"

Bitcoin was trading at about $67,200 at 20:32 UTC on 2 June, down roughly 46% from its all-time high of around $126,000 reached in October 2025, according to CoinGecko. Despite this decline, experts argue that limited crypto exposure could still make sense in long-term retirement portfolios.

"Crypto assets are indeed volatile, but we're talking about a small allocation within a portfolio and a long-term investment horizon of 30 years, so those concerns are not particularly applicable," Aleksandr Nechaev, partner at venture capital firm Funders VC, told Sandmark.

Rather than debating whether crypto should be included in retirement plans at all, Nechaev said the focus should be on how much exposure investors have. 

He said crypto should make up no more than about 3% to 5% of a retirement portfolio for now. "Over time, as institutional participation increases and the market infrastructure around DeFi products matures, that limit could gradually be raised," he added.

Markus Levin, co-founder of XYO, a decentralized physical infrastructure network (DePin), shared a similar view: "A cap in the low single digits makes sense. Small enough that a bad year doesn't wreck a retirement, big enough to matter when the asset performs while putting most of the volatility worry away."

Other risks already exist

Nechaev also explained that retirement investors already face risks from other parts of the market.

He pointed to newly implemented changes such as Nasdaq's "Fast Entry" rule, which allows large newly public companies to join the Nasdaq-100 after just 15 trading days, arguing that the change could increase their presence in passive investment funds. The Nasdaq-100 is a stock market index that tracks the 100 largest non-financial companies listed on the Nasdaq.

"This means that once SpaceX (roughly $5 billion net loss in 2025, ~$1.8 trillion valuation), OpenAI, and Anthropic go public, passive retirement capital will be forced to buy these stocks at whatever prices the market offers, with no discretion and no allocation limits, unlike crypto, which remains optional," he said. "In my view, for the average retirement saver, that's a bigger systemic risk than having a couple of percentage points allocated to Bitcoin."

SpaceX, OpenAI and Anthropic could deliver some of the largest IPOs ever seen if they proceed to market.

Bitcoin ETFs may be the best starting point

The experts also largely agreed that retirement plans should focus on simple crypto products rather than more complex investments.

"At this stage, I see spot Bitcoin, Ethereum, and Solana ETFs as the most appropriate options," Nechaev said. He added that more complex products, including some decentralized finance (DeFi) and tokenized investments, are not yet suitable for retirement accounts because regulations around them are still developing.

Levin expects digital assets to be adopted in retirement funds once a clear regulatory framework is in place. "Custody you can audit, pricing you can trust, valuation that holds up," he said. "We're close to that. When it's there, a small crypto allocation inside a target-date fund is just a normal part of the mix."