President Trump signed an executive order to allow $12.5 trillion 401(k) retirement funds to invest in crypto.

President Trump signed an executive order to allow $12.5 trillion 401(k) retirement funds to invest in crypto.

President Donald Trump signed an executive order that will allow the $12.5 trillion 401(k) retirement funds to invest in cryptocurrency and other alternative assets. The order, signed on Thursday, aims to ease regulatory constraints and expand investment options for retirement savers.

The executive order directs the Labor Department to reevaluate guidance around alternative asset investments in retirement plans subject to the Employee Retirement Income Security Act of 1974 within six months. It also clarifies the government's position on the fiduciary responsibilities associated with offering asset allocation funds that include alternative holdings [3].

The order instructs the Labor Secretary to work with counterparts at the Treasury Department, Securities and Exchange Commission, and other federal regulators to determine whether rule changes should be made to assist in the effort. The SEC is asked to facilitate access to alternative assets for participant-directed retirement plans [3].

This move is part of a broader embrace of the cryptocurrency lobby and a rollback of regulations on digital currencies by the Trump administration. It follows the White House's hosting of "Crypto Week" and discussions on new rules for stablecoins, and the idea of a national Bitcoin reserve [2].

Critics warn that allowing cryptocurrency in 401(k) portfolios carries a high degree of risk due to its speculative nature and a history of fraud. Anil Khurana, executive director of Georgetown University's Baratta Center for Global Business, expressed concern that opening the $9 trillion 401(k) industry to highly speculative and underregulated assets could be a mistake [1].

Despite the risks, proponents argue that younger savers could benefit from potentially higher returns on riskier investments. BlackRock plans to launch a retirement fund that includes private equity and private credit assets next year, although CEO Larry Fink acknowledged the litigation risk and the need for robust analytics and data [1].

The executive order is expected to have a significant impact on the retirement investment landscape. It opens up a vast new funding source for alternative asset managers and could lead to higher fees and limited liquidity for investors. The changes are likely to take time to implement, and lawsuits are expected from investors who may not fully understand the complexities of the new investments [1].

References:
[1] https://www.theguardian.com/us-news/2025/aug/07/trump-executive-order-cryptocurrency
[2] https://bitcoinist.com/just-in-trump-executive-order-to-expand-401k-investment-options-including-crypto/
[3] https://www.bloomberg.com/news/articles/2025-08-07/trump-to-sign-order-easing-path-for-private-assets-in-401-k-s