Elizabeth Warren warns of ‘volatile’ crypto risks in 401(k)s—here’s what investing pros say
Senator Elizabeth Warren (D-Mass.) has called on the Securities and Exchange Commission to detail its plans for protecting investors who hold cryptocurrencies in retirement portfolios, citing the asset class’s “volatility, weak investor protections and lack of transparency.”
In a letter to SEC Chair Paul Atkins, Warren argued that retirement accounts should not become a high-risk playground. “For most Americans, their 401(k) represents a lifeline to retirement security rather than a playground for financial risk. Allowing crypto into American retirement accounts creates fertile ground for workers and families to lose big,” she wrote.
The inquiry comes as the regulatory framework for digital assets takes shape. President Donald Trump signed an executive order in August paving the way for alternative assets, including cryptocurrency, to be included in workplace retirement plans. This week, the Senate Banking Committee is meeting to establish oversight roles between the SEC and the Commodity Futures Trading Commission.
Despite the regulatory uncertainty, crypto adoption in retirement savings is growing. A 2025 NerdWallet survey found that 10% of U.S. adults with retirement accounts hold some cryptocurrency, with higher rates among younger investors: 18% of millennials and 14% of Gen Zers. Financial institutions like Fidelity and Charles Schwab already offer direct or indirect crypto exposure in individual retirement accounts.
Financial experts remain divided on the appropriateness of crypto in retirement portfolios, though most acknowledge the significant risks. “The objective for the average person is to have a safe, secure retirement plan,” said Jerry Schlichter, a founding partner at Schlichter Bogard, a firm known for 401(k) litigation. “When you talk about new areas like cryptocurrency or private equity, these are fraught with danger for investors.”
The primary concerns are extreme volatility and a lack of long-term historical data. Bitcoin, considered more stable than other digital coins, has been about five times more volatile than the broad U.S. stock market over the past year. It experienced calendar-year declines of 74% in 2018 and 64% in 2022, though it has also seen astronomical gains over the past decade.
For investors considering crypto in retirement accounts, advisors recommend a cautious approach:
Assess Risk Tolerance: Crypto is suitable only for those with a high risk tolerance and a long time horizon until retirement.
Conduct Thorough Research: Investors should develop a clear, long-term investment thesis for holding digital assets.
Limit Allocation: Experts recommend capping crypto exposure at a small percentage of a portfolio—typically between 5% and 15%—to prevent significant losses from derailing retirement goals.
As regulatory bodies work to define their roles, the debate over safeguarding retirement savings in an evolving digital asset landscape continues.
