401(k)s now include crypto, private equity, and real estate, aiming for diversification.

401(k)s now include crypto, private equity, and real estate, aiming for diversification.

On August 7, 2025, President Donald Trump signed an executive order that aims to expand the investment options available in 401(k) plans, including cryptocurrencies, private equity, and real estate. This move, which has been reported by Bloomberg News [1], is intended to democratize access to alternative assets that have traditionally been reserved for wealthy individuals and institutions.

The executive order directs the Department of Labor to work with the Treasury Department, the Securities and Exchange Commission (SEC), and other federal regulators to determine whether rule changes should be made to facilitate the inclusion of these assets in retirement plans. The order also gives the Department of Labor 180 days to review existing rules and guidance, such as the controversial 2021 Supplemental Private Equity Statement [4].

The inclusion of cryptocurrencies in 401(k) plans is a significant development, as it could open up the $9 trillion U.S. retirement market to digital assets like Bitcoin. This move is expected to enhance investment options for millions of Americans and reflect a growing acceptance of cryptocurrencies in mainstream finance [3]. Major asset managers, such as BlackRock, are already developing crypto retirement products in anticipation of regulatory changes [3].

However, the expansion of 401(k) options to include high-risk alternatives raises concerns over volatility, illiquidity, and regulatory gaps. Cryptocurrencies, for instance, exhibit volatility four times greater than the S&P 500, which could pose significant risks to retirement accounts [4]. Experts recommend cautious allocations to these assets, with some suggesting a 1-3% allocation to low-correlation alternatives and the use of portfolio insurance strategies to balance potential gains against the inherent instability of cryptocurrencies [4].

The executive order is expected to have a seismic impact on retirement investment policy, forcing a reevaluation of strategic asset allocation models. While the inclusion of private assets like private equity and real estate in 401(k)s could offer diversification benefits, the lack of transparency in private markets and the speculative nature of cryptocurrencies remain significant hurdles. The Department of Labor's mandate to reevaluate ERISA guidance will shape how fiduciaries allocate these assets, with the potential to reduce regulatory friction and encourage broader adoption of private assets [4].

In conclusion, Trump's executive order represents a significant shift in retirement investment policy, aiming to diversify retirement portfolios and bridge the gap between institutional and retail investors. However, the success of this policy will depend on the ability of regulators to manage the risks associated with high-risk, high-reward assets like cryptocurrencies.

References:
[1] Reuters. (2025, August 7). Trump to sign order opening way for alternative assets in 401(k)s. Retrieved from https://www.marketscreener.com/news/update-1-trump-to-sign-order-opening-way-for-alternative-assets-in-401-k-s-bloomberg-news-reports-ce7c5edfdb8ff52c
[2] BBC News. (2025, August 7). Trump pushes to make it easier for Americans to use retirement savings to invest in cryptocurrencies. Retrieved from https://www.bbc.com/news/articles/c62w8ewg849o
[3] Coinotag. (2025, August 7). Trump’s executive order may pave the way for Bitcoin in 401k retirement plans. Retrieved from https://en.coinotag.com/trumps-executive-order-may-pave-the-way-for-bitcoin-in-401k-retirement-plans/
[4] AInvest. (2025, August 7). Trump crypto-friendly 401 executive order implications for retirement portfolios. Retrieved from https://www.ainvest.com/news/trump-crypto-friendly-401-executive-order-implications-retirement-portfolios-2508/