New Opportunity in Crypto? Trump Opens 401(k) to Crypto!
President Donald Trump has signed an executive order that effectively opens the gates for U.S. retirement savings to flow into alternative assets, including private equity and cryptocurrencies, through 401(k) plans.
The measure removes long-standing barriers that have prevented private funds and other alternative asset managers from tapping into trillions of dollars in retirement savings, potentially creating a vast new source of capital beyond the traditional mix of stocks, bonds, and cash.
Trump’s New Move: Another Historic Moment for Cryptocurrency
Since the start of his second term, President Donald Trump has taken a series of cryptocurrency-friendly actions, such as the Genius Act and this week’s executive order. Digital assets such as Bitcoin and Ethereum are increasingly being viewed as mainstream investment vehicles rather than niche instruments discussed only within the investment community.
A review of Bitcoin’s historical returns shows that, despite its substantial volatility, the cryptocurrency ranks among the top-performing assets across categories. As mainstream markets begin to accept BTC and other crypto assets as “investment-grade” holdings, Bitcoin’s position as “digital gold” is likely to become more entrenched. Moreover, with long-term capital — including retirement savings — beginning to flow into the crypto market, the volatility of major cryptocurrencies could moderate, making them more suitable for portfolio allocation by both retail investors and institutional asset managers.
Implications for the Cryptocurrency Market
The U.S. 401(k) retirement system currently manages roughly $9 trillion in assets. If the executive order is implemented in the coming months and plan administrators allocate just 1% of those funds — about $900 billion — into mainstream cryptocurrencies such as Bitcoin and Ethereum, the potential inflow would dwarf the size of the largest existing Bitcoin exchange-traded fund, the iShares Bitcoin Trust $iShares Bitcoin Trust ETF(IBIT)$ , managed by BlackRock, which holds approximately $85 billion in assets. $iShares Ethereum Trust ETF(ETHA)$
Given the nature of 401(k) plans as long-term retirement vehicles, any crypto allocations would likely focus on established tokens such as BTC $Bitcoin(BTC.USD.CC)$ , ETH $Ethereum(ETH.USD.CC)$ and potentially Solana (SOL) $Solana(SOL.USD.HKCC)$ . With Bitcoin’s current market capitalization standing at around $2 trillion, a $900 billion inflow would represent roughly 45% of its market value — a scale that could drive another major leg higher in BTC prices. Should allocations exceed 1% of 401(k) assets, the long-term upside for Bitcoin would be even greater. On Thursday, Bitcoin’s price rose 2% to $116,542 and has nearly doubled since Trump’s election victory.
In turn, this policy is set to reshape not only the cryptocurrency sector but also a broad range of financial services. Leading asset managers such as BlackRock $BlackRock(BLK)$ , Fidelity, and Grayscale could see strong growth in demand for their crypto and private fund products. Brokerage and retirement platforms, including Charles Schwab $Charles Schwab(SCHW)$ and Fidelity, are expected to speed up the rollout of 401(k) plans that allow crypto investments. Companies in mining, trading, and blockchain infrastructure—such as Marathon Digital $MARA Holdings(MARA)$ , Riot Platforms $Riot Platforms(RIOT)$ , and Coinbase $Coinbase Global, Inc.(COIN)$ —may benefit from higher liquidity, wider adoption, and deeper institutional participation. Together, these changes could mark a turning point in how retirement capital is allocated, setting new norms across asset classes.
Implications for the 401(k) Retirement System
U.S. retirement plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA), which requires employers to provide investment options in the best interests of their employees, rather than Wall Street. Most American retirement portfolios are composed primarily of stocks and bonds, with smaller allocations to cash and heavily traded commodities such as gold.
By introducing long-term, high-return potential cryptocurrencies into the traditional 401(k) mix, plan sponsors could create an additional hedge against risks faced by conventional asset classes under certain market conditions. This executive order may also serve as a regulatory and product blueprint, potentially paving the way for other retirement schemes — such as Individual Retirement Accounts (IRAs) in the U.S., Singapore’s Central Provident Fund (CPF), and Canada’s Registered Retirement Savings Plan (RRSP) — to follow suit.
However, critics warn that such changes could expose retirement portfolios to excessive risk. While a 2% to 3% move in the equity market in a single day is considered significant, it is not uncommon for Bitcoin, Ethereum, and other major cryptocurrencies to swing by 10% or more in the same period.
In the long run, though, Bitcoin’s strong returns have attracted growing institutional interest. As the regulatory framework for digital assets becomes more robust, the market is expected to advance further along a legitimate, regulated path. Legislative measures will also help safeguard the rights of the investors entering this expanding asset class.
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