US President Donald Trump continues his efforts to more strongly integrate cryptocurrencies into the national economy. To this end, he is preparing to sign a notable executive order. According to Bloomberg, this new order aims to pave the way for the US Department of Labor to include alternative assets such as cryptocurrency, private equity, and real estate in 401(k) retirement plans. The order is expected to be signed on Thursday.
Crypto era in 401(k) accounts
With Trump's executive order, Labor Secretary Lori Chavez-DeRemer will reassess existing rules under the 1974 Employer Retirement Income Security Act (ERISA). She will also coordinate with agencies such as the Treasury Department and the Securities and Exchange Commission (SEC) to examine regulatory changes regarding how crypto assets and other alternative investment vehicles can be safely integrated into defined contribution plans like 401(k)s. This initiative could open approximately $12.5 trillion in defined contribution accounts to new investment options. This would make alternative products, such as crypto and private equity, available only to accredited investors, available to mainstream savers.
Call to the SEC
The executive order also calls on the SEC to facilitate access to alternative assets. This could allow individual retirement investors direct access to digital asset products like spot Bitcoin ETFs. However, these steps would require careful consideration by plan sponsors regarding risks such as custody, pricing, and volatility.
This move stands out as the Trump administration's most aggressive move yet in integrating crypto into the US financial system. In May, the Trump administration formally withdrew guidance introduced under the Biden administration that discouraged crypto in retirement plans. At the time, the Department of Labor stated that the previous administration "intentionally tipped the scales."
Trump's crypto expansion
With this decision, the Trump administration is implementing part of a broader crypto vision. A 166-page crypto report published earlier this year outlined strategic objectives for the US's role in the digital asset economy. This document aimed to simplify regulations, facilitate adoption, and maintain US global leadership.
Furthermore, during the White House's "Crypto Week" event, Trump signed the first federal stablecoin regulatory bill. Around the same time, steps were taken to establish a "Strategic Bitcoin Reserve" for the US.
As a result, 401(k) plans, traditionally limited to assets like stocks and bonds, will now be able to include higher-risk but potentially high-return assets like cryptocurrencies and private equity. This could offer American investors the opportunity to make their retirement portfolios more flexible and diversified.
Of course, this change will require time and detailed regulations to materialize. However, the community is quite excited for one reason: once the executive order becomes official, the crypto sector could see billions of dollars in new funds flow into the crypto sector in the coming years.
