The U.S. President signed an executive order allowing investments in crypto, private equity, real estate, and other alternative assets within 401(k) retirement plans. These changes affect more than 90 million Americans.
Donald Trump signed a directive instructing the Department of Labor and the U.S. Securities and Exchange Commission (SEC) to update regulatory frameworks regarding the types of assets eligible for inclusion in 401(k) retirement plans. In particular, the order lifts previous restrictions on the use of digital assets in retirement savings portfolios.
According to the President’s directive, fiduciary duties will be permitted to include in retirement plan investment strategies assets that were previously accessible only to institutional investors and sovereign funds. Previously, American retirement savings were limited to stocks and bonds. Trump’s order allows allocations to private equity, private debt instruments, infrastructure projects, real estate, cryptocurrencies, and various lifetime income strategies.
The Council of Economic Advisers (CEA) estimates that Trump’s initiative could increase lifetime income for 401(k) participants by 0.5–2.5%, while the overall macroeconomic effect could amount to $35 billion, or 0.12% of U.S. GDP.
In response to the President’s mandate, the Department of Labor withdrew its 2021 warning that discouraged the inclusion of private equity and cryptocurrencies in retirement products due to legal risks. However, the department emphasized that fiduciary responsibility for risk assessment and compliance with ERISA standards will remain crucial.
Trump’s initiative was welcomed by both the TradFi industry and the crypto community. Major asset managers, including BlackRock and Fidelity, announced plans to create target-date funds with up to 2% allocation to alternative assets. Representatives of the crypto industry called the order a “historic moment,” expecting that access to crypto in retirement savings will provide the digital asset market with a stable source of demand.
Implementation of Trump’s directive will be carried out in stages. Regulators must first define the list of eligible instruments. Then, asset managers will offer new 401(k) solutions, including brokerage windows that will allow investors to independently purchase digital assets. After that, crypto options may be integrated into standard target-date funds. In the final stage, regular retirement contributions ranging from 1% to 10% of wages may be automatically allocated to such assets.
Analysts estimate that if at least 5% of the $8.7 trillion in 401(k) assets is directed into Bitcoin or altcoins, capital inflows could exceed $400 billion, creating sustained demand for cryptocurrencies from the U.S. retirement system and having a long-term impact on the digital asset market.
At the same time, experts warn that despite the significant potential, cryptocurrencies remain high-risk instruments. Financial advisors are therefore recommended to limit their share in retirement portfolios to 1–2%. Analysts believe such a cautious approach will balance higher returns with investor protection.
