The $9 trillion retirement market is about to open, and the ban on cryptocurrency investments is about to be lifted.
According to the Financial Times, President Trump is preparing to sign an executive order that will allow the $9 trillion U.S. retirement market to invest in alternative assets such as cryptocurrencies, gold, and private equity. This order is expected to be signed this week and will instruct federal regulators to remove barriers to including these non-traditional investments in 401(k) retirement plans.
This executive order covers a wide range, including digital assets, precious metals, private loans, infrastructure deals, and corporate acquisition funds. Currently, most 401(k) accounts are limited to investing in mutual funds that hold publicly traded stocks and bonds. Trump's plan will allow fund managers to increase investments in Bitcoin and other digital assets, giving Americans more choices for retirement savings.
A White House spokesperson told the Financial Times: 'President Trump is committed to restoring prosperity for ordinary Americans and securing their economic future.' However, the White House emphasized that no decisions should be seen as formal unless announced personally by President Trump.
This policy builds on the Trump administration's previous efforts to relax regulations on Bitcoin and cryptocurrency. In May of this year, the Department of Labor rescinded regulations from the Biden administration that discouraged the inclusion of Bitcoin and other cryptocurrencies in retirement plans.
Large investment institutions benefit, with legal protections launched simultaneously.
This executive order is expected to benefit large private investment firms like Blackstone, Apollo, and BlackRock. These companies are betting a significant portion of their future growth on managing investment funds for retirement savers.
Blackstone has partnered with Vanguard, while companies like Apollo and Partners Group will provide investment services to large 401(k) plan sponsors like Empower. BlackRock has begun collaborating with third-party retirement savings plan management company Great Gray Trust.
According to reports, the Department of Labor has also been asked to create legal safe harbor provisions for plan managers, which would limit their liability when offering higher-risk private assets, including those that have higher fees and lower liquidity than traditional investments. This protective measure is crucial for promoting the adoption of alternative investments in retirement plans, as it alleviates legal concerns for fund managers.
Trump has publicly stated that the cryptocurrency community helped him win the 2024 election. His family company, Trump Media Technology Group, has invested over $2 billion in cryptocurrency and has launched its own stablecoin and digital tokens. A White House representative also stated that President Trump has expressed support for eliminating the capital gains tax on cryptocurrencies, which would exempt small Bitcoin transactions from taxes and promote the adoption of cryptocurrencies.
States have taken the lead, and international trends are developing in parallel.
Before changes in federal policy, several states in the United States have begun to incorporate digital assets into retirement investments or are seeking to do so. In March of this year, North Carolina legislators introduced two bills that would allow up to 5% of certain retirement fund balances to be invested in cryptocurrency. In 2024, the Michigan retirement system revealed holdings of approximately $6.6 million in ARKB Bitcoin ETF and $10 million in Ethereum ETF investments. The Wisconsin Investment Board disclosed it holds a $163 million stake in a spot Bitcoin ETF.
Further Reading
I have great faith in the second brother! Michigan retirement fund buys Ethereum ETF, building a position of over $10 million.
As of September 30, 2024, the 401(k) market holds $8.9 trillion in assets across more than 715,000 plans. A 401(k) is a retirement savings plan offered by many employers in the United States that allows employees to save and invest part of their paycheck before tax. Current investments typically focus on mutual funds, exchange-traded funds, stocks, and bonds.
Similar trends are also emerging internationally. In November last year, UK pension expert Cartwright reported that an 'unnamed plan' had allocated 3% of Bitcoin into its retirement fund. Meanwhile, the Japanese government pension investment fund also considered Bitcoin as a potential diversification tool last March. These international developments indicate that incorporating cryptocurrencies into retirement investment portfolios is becoming a global trend, and changes in U.S. policy will further drive the development of this trend.
'Helping you trade cryptocurrencies with retirement funds? Trump plans to sign an executive order to allow 401(k) investments in cryptocurrencies.' This article was first published in 'Crypto City'.
