Sen. Elizabeth Warren (D-Mass.) sent a letter to Securities and Exchange Commission Chairman Paul Atkins this week asking how the agency plans to protect investors who hold cryptocurrencies in their retirement portfolios, citing the asset class’s “volatility, weak investor protections, and lack of transparency.”
“For most Americans, 401(k)s are not a playground of financial risk, but a lifeline to retirement security. Allowing cryptocurrencies in American retirement accounts creates fertile ground for workers and families to suffer significant losses,” Warren wrote.
In August, President Donald Trump signed an executive order laying the groundwork for adding alternative assets, including cryptocurrencies, to workplace retirement accounts. The Senate Banking Committee will meet Thursday to establish a framework for cryptocurrency oversight between the SEC and the Commodity Futures Trading Commission.
Some brokerages, such as Fidelity, already offer direct cryptocurrency investing in individual retirement accounts, and others, such as Charles Schwab, offer access to crypto exchange-traded funds. Additionally, according to a 2025 study by NerdWallet, 10% of U.S. adults with retirement accounts say they own at least some amount of cryptocurrencies. Younger investors are even more enthusiastic, with 18% of Millennials and 14% of Gen Z reporting owning cryptocurrencies during retirement.
Financial experts are divided on whether holding cryptocurrencies is a wise or appropriate addition to retirement savings, but nearly all acknowledge some level of risk.
“The average person’s goal is to have a safe and secure retirement plan,” Jerry Schlichter, a founding partner at Schlichter Bogard, known for his lawsuits on behalf of employees over excessive fees in 401(k) plans, previously told CNBC Make It. “When we talk about new areas like cryptocurrencies and private equity, these are risky for investors for a variety of reasons.”
Weigh the risks and potential returns of cryptocurrencies
Financial professionals’ hesitancy toward cryptocurrencies generally stems from two sources. One is asset class volatility. In the year ending January 2025, Bitcoin (considered more stable than other less traded digital coins known as altcoins) was about five times more volatile than the overall U.S. stock market, according to iShares.
From 2015 to 2025, Bitcoin experienced two major calendar year drawdowns. It fell 74% in 2018 and 64% in 2022.
Still, Bitcoin is up more than 22,000% over the past decade, compared to the S&P 500’s price increase of about 440%.
Past performance does not guarantee future results. This applies to any investment, but the lack of a long-term track record with cryptocurrencies also tends to give financial advisors pause when assembling a portfolio.
“These traditional retirement guardrails are based on a long history,” says Melissa Caro, certified financial planner and founder of My Retirement Network. “There is not enough history on how cryptocurrencies actually work.”
How to invest in cryptocurrencies responsibly
If you, like Schlichter, view retirement accounts primarily as a vehicle designed to protect your assets, cryptocurrencies probably don’t belong in your IRA or 401(k), he says.
But many money professionals, including fiduciaries who have a duty to act in the best financial interests of their clients, warm to the idea, provided they take certain precautions.
“Fiduciary (responsibility) still applies, but there are a lot of very smart investors who are saying Bitcoin is the best risk-reward investment right now,” says Joshua Brooks, CFP and founder of Exponential Advisors.
If you’re interested in adding cryptocurrencies to your retirement portfolio, here are three steps to investing responsibly.
1. Know yourself
“Cryptocurrency is a huge opportunity for people, depending on their risk tolerance,” says Thomas Rucka, manager of the personal finance management team at Navy Federal Credit Union.
In general, the better you can handle downsides in your investments, the higher your risk tolerance. That may mean you’re more likely to hold on to, or even add to, investments that have declined in value, rather than panic selling them.
It could also mean you’re young and have time to bounce back on your investment. This is also known as risk “capacity.” If you’ve been using your portfolio for income for less than a year, you probably can’t afford a 20% decline in your retirement account. For those planning to retire in a few decades, this isn’t such a big worry.
Given cryptocurrencies’ track record of volatility, this is only suitable for investors who have a healthy appetite for risk and know what they’re getting into, Rucka says.
2. Do your research
Brooks says both retirement savers and financial advisors should do their homework on digital assets before investing in or recommending them.
“Like any investment, you need confidence based on research,” he says. Perhaps you want to hold Bitcoin because you like its potential as an alternative currency. Perhaps you like the role of Ether in smart contracts.
Whatever your reason for holding cryptocurrencies in your retirement account, it’s essential to have a long-term theme that you can reevaluate regularly. Otherwise, Brooks says, you’re just hoping things keep going up.
3. Don’t push yourself too hard
Even if you’re convinced of cryptocurrencies’ long-term potential, Caro says even the most convict investor would be wise to tread carefully due to the asset class’s short history.
“There’s not enough information,” she says. “You might look back and realize you were being too cautious, but that’s what retirement planning is all about.”
Financial planners typically recommend allocating a modest percentage of your portfolio to risky assets, such as cryptocurrencies, in the hopes that a significant drawdown in that part of your portfolio won’t derail your long-term plans.
Brooks recommends an allocation of up to 5% to 15%, depending on risk tolerance, time horizon, and other sources of income. “Do not exceed the amount you can afford to lose completely.”
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