President Donald Trump is set to issue an executive order on Thursday, August 7, permitting 401(k) retirement accounts to incorporate alternative investments such as private equity, real estate, and cryptocurrencies.
The directive will mandate the U.S. Department of Labor to evaluate and potentially update current regulations under the Employee Retirement Income Security Act of 1974 (ERISA) regarding alternative assets, according to Bloomberg.
Additionally, the department will need to define how fiduciary responsibilities are applied when funds allocate assets to these new investment categories.
**Implications of Trump’s 401(k) Directive:** This change is poised to benefit alternative investment firms by opening up a $12 trillion retirement market, potentially mainstreaming their offerings.
The broader cryptocurrency sector is also anticipated to be impacted. For example, Bitcoin (BTC) surged from $114,900 to $115,670 within an hour of the announcement.
Although Bitcoin remains below the key $120,000 mark, the price increase has sparked significant speculation, as reflected in a 1.25% rise in futures open interest over the past hour, according to CoinGlass data.
However, immediate changes may not occur, as new regulations will need to be developed by government agencies, a process that could extend into 2026, per Jaret Seiberg of TD Cowen Washington Research Group.
Similarly, once regulations are set, employers managing retirement plans will need to conduct thorough research and make adjustments to include these new investment choices.#CryptoIn401(k) #cryptocurrency #bitcoin #BTC #401K
