What is cryptocurrence
Cryptocurrency is digital money secured by cryptography and recorded on a blockchain—a shared, unchangeable digital ledger. Bitcoin is the most well-known example. Supporters like crypto because it bypasses banks, allows peer-to-peer transfers, and offers the potential for high returns.
The problem is that crypto prices swing wildly. In one week in May 2022, Bitcoin dropped 20% and Ethereum 26%, while major stock indexes fell by only single digits. On top of volatility, the crypto world is plagued by theft, fraud, software bugs, and hacks. In early 2025 alone, more than $500 million in crypto was stolen.
Why Cryptocurrency Is Risky for Unsophisticated Investors
Investing in crypto requires technical knowledge, market awareness, and strong security habits. Many retail investors underestimate its volatility and overestimate its safety. A 2024 Pew survey found that 63% of Americans had little or no confidence in crypto’s reliability or safety. Scams, “pump-and-dump” schemes, and phishing attacks remain common. Without education and a strategy, unsophisticated investors risk losing their money fast.
Trump’s New Rule: 401(k) Funds in Crypto
On August 7, 2025, President Trump signed an executive order allowing 401(k) retirement plans to include alternative assets such as cryptocurrency and private equity. Agencies are now tasked with rewriting rules so retirement funds can offer these options.
This change matters because 401(k)s hold long-term retirement savings. Mixing in high-volatility assets like crypto puts decades of savings at risk. Alternative assets also tend to carry higher fees, less transparency, and limited liquidity. For someone unfamiliar with crypto’s risks, one bad decision could wipe out years of retirement contributions.
Trump’s Deregulation Push: Favors Industry, Harms Vulnerable Investors
Trump’s crypto policy goes beyond adding it to retirement accounts. His administration has:
Pulled back SEC enforcement and disbanded the DOJ’s crypto crimes unit.
Pushed the CLARITY Act, shifting oversight from the SEC to the less-resourced CFTC.
Signed the GENIUS Act, which sets stablecoin rules but leaves risks in the private market.
Blocked a central bank digital currency, removing the possibility of a federally backed, regulated digital option.
For the crypto industry, this is a green light for rapid growth. For vulnerable investors, it means weaker consumer protections, fewer fraud investigations, and a regulatory environment that favors platforms over people. Without strong guardrails, predatory schemes can flourish.
Why Black Investors Are Especially at Risk
Black investors are more likely than white investors to own crypto—18% vs. 13% in one recent study—and more likely to see it as a pathway to wealth. But systemic wealth gaps and historical exclusion from mainstream finance make the risks more dangerous:
Black investors are more likely to borrow to invest in crypto.
Losses hit harder because of lower average household wealth—$24,100 median for Black households versus $188,200 for white households.
A lack of targeted investor protection means scams and fraudulent platforms can operate longer before being shut down.
The combination of high exposure, lower financial cushion, and weak regulatory oversight makes Black investors disproportionately vulnerable in the current deregulated environment.
Bottom Line
Cryptocurrency remains a speculative, volatile asset class. Opening the door for 401(k) investments in crypto—while at the same time weakening oversight—exposes the most vulnerable investors to life-changing losses. For Black investors, who already face systemic barriers to wealth, this combination is especially dangerous. Regulation should protect those most at risk, not remove the guardrails they rely on.
