Bitcoin’s 50% fall from its October peak has done more than just erase $2 trillion in market value: it has reignited a fierce debate over the fiduciary calculations of the U.S. retirement system.
As investors scramble to analyze the causes of the latest crash, industry observers are wondering whether volatile digital assets have anything to do with a $12.5 trillion 401(k). market designed for stability.
“If investors want to speculate in crypto, they are welcome to do so on their own. 401ks exist to help people save for a secure retirement, not gamble on speculative assets with no intrinsic value,” said Lee Reiners, a lecturer at the Duke Financial Economics Center and co-host of the Coffee & Crypto podcast.
US President Donald Trump issued an executive order in August allowing 401(k) and other defined contribution pension plans to access alternative assets, including digital assets. Even Securities and Exchange Commission (SEC) Chairman Paul Atkins said last week, just on the eve of the latest crypto selloff, that “now is the time” to open the retirement market to crypto.
But crypto’s recent rout may well distract retirement fund managers from plans to add crypto to 401(k)s.
Reiners said several large crypto companies, such as Coinbase (COIN), are already included in major stock indexes, meaning many 401(k) plans already have indirect exposure to crypto, and that should be enough.
“Unless Congress changes the law, plan sponsors are unlikely to include crypto or ETFs in their plan options because they don’t want to be sued by their employees. For any employers who were considering doing so, I’m sure recent events have caused them to reconsider,” Reiners said.
The problem with investing people’s savings in crypto is that the sector is relatively young and extremely volatile, and pension funds are geared for stable growth.
Buy and hold can work for assets like the S&P 500, which experiences high volatility primarily during Black Swan events, such as the 2008 financial crisis or COVID-19 uncertainties. However, given the size of traditional markets, the government often intervenes to stop the bleeding, and many regulatory frameworks exist to protect citizens’ investments.
But for crypto, much of its activity is just speculation, meaning prices can see extreme swings over the course of a weekend or week, which can quickly decimate billions in value without any regulatory oversight over market movements. This makes it even more stressful for investors to put all their savings into it.
I didn’t “get out quickly”
To put the uncertainty in perspective, many businesses were likely blindsided by the sudden collapse of bitcoin and crypto over the past few days.
In fact, the recent selloff was so violent and sudden that BlockTrust IRA, an AI-powered retirement platform that added $70 million in IRA funds over the past 12 months, was caught in the bloodbath.
“Sometimes we look at things that we say, ‘you know what, we should exit,’ and sometimes we don’t. And last week we didn’t exit as quickly because a lot of the underlying fundamentals that we’re looking at are still very strong,” Maximilian Pace, CTO, said in an interview with CoinDesk.
However, regarding the sudden sell-off, Pace highlighted the company’s “broad sense of analysis”, which works effectively on longer time frames than short-term trading. This strategy has helped it outperform in 2025, and the company added that it is “not necessarily shaken by volatility.” The AI trading firm’s Animus fund outperformed bitcoin throughout 2025 and rose 27% from January to December 2025, while bitcoin’s buy-and-hold strategy declined 6% to 13% over the same period, the company said in a press release.
In Pace’s opinion, zooming out and looking at crypto investments over a five- to 10-year time horizon is the right way to think about 401(k) plans.
“You’re better off thinking like a venture capitalist rather than a day trader,” Pace said. “There are ways to de-risk investing, either from a time perspective or a strategic perspective, that make it more attractive or more palatable for things like 401(k) programs. But like anything, there is risk.”
The future of pensions
Perhaps there is a need to zoom out and think about real blockchain technology for managing retirement investments rather than just investing money in tokens.
Robert Crossley, global head of industrial and digital consulting services at Franklin Templeton, thinks exactly that. The retirement industry, which he says is siled, slow and over-regulated, could be revolutionized by on-chain wallets containing tokenized assets.
And in doing so, an individual’s digital wealth will be much more aligned with the rest of their life, Crossley said.
“Whether you’re a saver, an investor or a spender, you have all these different financial activities that are currently being handled very differently by different providers in your life,” Crossley said in an interview.
If regulations do not prohibit innovations come into play, it is very likely that blockchain technology can eliminate such fragmentation of intermediaries. It’s possible the industry could see an offering of wallets that “open up the possibility of programmable assets and securities and the ability to see all your assets in one place and control them directly, rather than going through an intermediary,” he said.
“When something becomes tokenized, it becomes software. That software could be an asset, but it could also be an advantage, it could also be a liability. It could be a full 401(k). It could be your entire DC. [defined contribution] plan,” Crossley said.
