Bitcoin’s 50% drop from its peak in October has done more than wipe out $2 trillion in market capitalization—it has reignited a fierce debate over the fiduciary governance of the U.S. pension system.
As investors scramble to parse the causes of the latest crash, industry watchers are asking whether volatile digital assets have any business in the $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 lecturing fellow 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 plans access to alternative assets, including digital assets. Even Securities and Exchange Commission (SEC) Chairman Paul Atkins said last week, right on the eve of the latest brutal crypto selloff, that “the time has come” to open the pension market to crypto.
But the latest rout in crypto might just turn pension fund managers away from plans to add crypto to 401(k)s.
Reiners said several major 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 as plan options because they don’t want to be sued by their employees. For any employer who was considering it, I’m sure recent events have caused them to reconsider,” Reiners said.
The problem with putting people’s life savings into crypto is that the industry is relatively young and extremely volatile, and pension funds are too stable for growth.
Buy and hold can work for assets like the S&P 500, which mostly see high volatility during Black Swan events, such as the 2008 financial crisis or COVID-19 uncertainty. However, given the size of traditional markets, the government often steps in to stop the bleeding, and several regulatory frameworks exist to protect people’s investments.
But for crypto, much of its activity is speculation, meaning prices can see extreme swings over a weekend or a week, which can quickly decimate billions in value without regulatory oversight of market movements. This makes it even more nerve-racking for investors to put their life savings into it.
Don’t get out fast
To put the uncertainty into perspective, many businesses were probably blindsided by the sudden crash in bitcoin and crypto over the past few days.
In fact, the recent brutal selloff was so violent and sudden that BlockTrust IRA, an AI-powered retirement platform that has added $70 million in IRA funds in the past 12 months, was caught up in the carnage.
“Sometimes we look at things that we say, ‘you know what, we should get out,’ and sometimes we don’t. And last week, we didn’t get out as quickly because a lot of the underlying fundamentals that we’re looking at are still very strong,” Chief Technical Officer Maximilian Pace said in an interview with CoinDesk.
Regarding the sudden selloff, however, Pace pointed to the firm’s “broad sense of analytics,” which works effectively over longer timelines than short-term trading. This strategy helped it outperform in 2025, and the firm added that it is “not necessarily shaken by volatility.” The AI trading firm’s Animus Fund outperformed bitcoin throughout 2025, rising 27% from January to December 2025, while the bitcoin buy-and-hold strategy fell 6% to 13% over the same period, the firm said in a press release.
In Pace’s view, zooming out and considering crypto investments over a time horizon of five to 10 years is the right way to think about 401(k) plans.
“You’d be better off thinking like a venture capitalist rather than a day trader,” Pace said. “There are ways to de-risk the investment, either from a timing perspective or from a strategy perspective, that make it more attractive or more acceptable for things like 401(k) programs. But like anything, there’s risk.”
The future of pensions
Perhaps there is a need to zoom out further and think about the actual blockchain technology for retirement investment management than just putting money into tokens.
Robert Crossley, Franklin Templeton’s global head of industry and digital advisory services, thinks exactly that. The pension industry, which he says is siloed, slow-moving and over-regulated, could be revolutionized by onchain wallets that hold tokenized assets.
And by doing so, a person’s digital wealth will be much more aligned for the rest of their life, Crossley said.
“Whether you’re a saver, an investor, a spender, you have all these different financial activities that are currently served very differently by different providers in your life,” Crossley said in an interview.
If regulations come into play that do not prohibit innovations, it is very likely that blockchain technology can eliminate such fragmentation of middlemen. It’s possible the industry could see an offering of wallets that “unlock the possibility of programmable assets and securities and the ability to see all your assets in one place and control them directly instead of being mediated,” he said.
“When something gets tokenized, it becomes software. That software can be an asset, but it can also be a benefit, it can also be a liability. It can be an entire 401(k). It can be your entire DC [defined contribution] plan, Crossley said.
