Trump Order May Allow 401(k) Plans to Invest in Cryptocurrencies

President Donald Trump is preparing to sign an executive order that could significantly alter the landscape of retirement investing in the U.S. This order aims to direct federal agencies to allow 401(k) retirement plans to invest in alternative assets, including cryptocurrencies, private loans, corporate takeover funds, and precious metals. This move would shift 401(k) plans beyond their current focus on stocks, bonds, and mutual funds, potentially offering savers more diverse investment opportunities.

The executive order, if signed, would instruct regulatory bodies to identify and remove any legal or procedural obstacles that currently block access to non-traditional assets. This follows a policy reversal by the Labor Department in May, which rescinded earlier guidance that discouraged crypto exposure in retirement plans. The Biden-era policy had raised concerns about volatility and investor protection in digital assets. The upcoming order seeks to provide a clear path for retirement plan administrators and offer legal support to fund managers who want to include alternative investments.

Major asset managers are already positioning themselves for these potential changes. Firms like Blackstone, Apollo, and BlackRock are exploring partnerships with retirement service providers to bring private equity products to individual savers. Fidelity has already launched a crypto-focused retirement account, and Empower and Great Gray Trust are developing channels to distribute private market offerings. Industry insiders suggest this order could shift hundreds of billions in new investment into private funds, which often come with higher fees and less liquidity than traditional investments.

However, the risks remain high for retirement savers. Private investments are complex and lack daily pricing, while crypto assets are associated with high fees and regulatory uncertainties. Regulators would be required to provide safeguards and transparency, and financial advisors could have more influence in advising savers in such unfamiliar options. The order, if signed, would mark an important change in U.S. retirement policy and could redefine how millions of Americans grow their retirement savings.