Original Author: Dingdang
Reprinted: Daisy, Mars Finance
Yesterday, Bloomberg disclosed that Trump will sign an executive order on Thursday aimed at allowing private equity, real estate, cryptocurrencies, and other alternative assets to be included in 401(k) pension plans. The news swept away the grey days caused by tariffs, and the crypto market performed strongly. Bitcoin strongly broke through the pressure level near $115,500, Ethereum once again attacked the $4,000 mark, and the altcoin sector was fully stirred. Is the long-awaited "altcoin season" finally coming?
What is a 401(k)? Why is the new policy significant?
The 401(k) plan is one of the most important retirement savings tools in the United States, managing about $9 trillion in assets, covering the retirement funds of tens of millions of Americans. As an employer-sponsored long-term savings plan, 401(k) traditionally focuses on low-risk, high-liquidity assets, such as stocks, bonds, and mutual funds, aimed at providing stable, long-term returns for retirees.
Trump’s executive order has directly torn open this conservative framework—clearly allowing high-risk, high-reward alternative assets to enter the 401(k) system for the first time, including cryptocurrencies, gold, private equity, and real estate. This means that tens of trillions of dollars in retirement funds may flow into previously regarded as "non-mainstream" markets, reshaping the investment landscape of U.S. pensions.
This is not Trump's first attempt to loosen the investment scope of 401(k). As early as 2020, the Department of Labor under his administration had signaled allowing 401(k) plans to access private assets, but due to the lack of presidential executive order endorsement, coupled with the low liquidity and limited transparency of private assets, it ultimately failed to trigger widespread follow-up. This time, however, the new policy personally signed by the president not only has greater force but also clearer execution determination.
In May 2025, the U.S. Department of Labor took the lead in revoking the restrictive guidance on including cryptocurrencies in 401(k) plans from the Biden administration, paving the way for this step. Meanwhile, the Federal Housing Finance Agency also required Fannie Mae and Freddie Mac to include the crypto assets held by borrowers in the housing mortgage assessment system, indicating that the Trump administration is trying to incorporate crypto assets into the U.S. economy at multiple levels.
Market estimates indicate that if the 401(k) plan allocates just 2% of its assets to cryptocurrencies, it would mean an inflow of about $170 billion—equivalent to two-thirds of the current market capitalization of existing crypto spot ETFs and listed reserves. This volume of funds is enough to make the entire crypto market boil.
However, the implementation of the policy will not yield immediate effects. The executive order requires the Department of Labor and the SEC to develop detailed regulatory details and establish a "safe harbor" mechanism for 401(k) plan managers to reduce the legal risks they may face by offering high-risk assets. The creation of a regulatory framework may take months or even years, and the investment ratios and specific asset ranges also need to be clarified. Nonetheless, its symbolic significance and potential impact are already enough to ignite the market's imagination.
State-level pilot programs, institutions rushing to layout
Before federal policies are fully implemented, some state governments have already taken the lead.
North Carolina proposed the (North Carolina Digital Asset Investment Act) (House Bill 92) in March 2025, authorizing the state treasurer to invest up to 5% of the state's public pension fund in digital assets like Bitcoin. Supporters of the bill, Republican Congressman Mike Schietzelt, stated that this opens up a new asset class for the state’s fiscal health. As of May 2025, the bill has passed the state House and is still under consideration in the Senate.
Wisconsin and Michigan have taken the lead. In May 2024, the Wisconsin Investment Board disclosed that it had purchased about $160 million worth of Bitcoin spot ETFs (mainly invested in BlackRock ETFs), accounting for 0.1% of its over $100 billion pension fund. Although it was reduced to $104 million in September, it has become a precedent for state-level pension allocation of cryptocurrencies. Michigan, on the other hand, disclosed in July 2024 that its pension fund purchased about $6.5 million worth of Bitcoin ETFs, included in the retirement investment portfolio for state government employees and teachers.
Arizona is also active. In February 2025, Republican state Senator Jake Hoffman proposed that the state retirement system consider allocating to Bitcoin ETFs.
Although these investment scales are not large, they are seen as signals of state-level pension "pilot programs," providing reference samples for other states.
Meanwhile, Wall Street institutions are also keenly capturing the policy direction and accelerating their layouts to seize the 401(k) market opportunity. Fidelity, an industry giant managing $5.9 trillion in assets, will launch retirement account products supporting cryptocurrencies in April 2024, allowing investors to invest in Bitcoin and Ethereum spot ETFs through self-directed brokerage accounts (SDB).
Jon Gray, president of Blackstone, stated that leading institutions in the alternative asset field will be the first to benefit from the new 401(k) policy, expecting to attract hundreds of billions of dollars in inflows. Blackstone is working with Morgan Stanley to develop private equity investment tools aimed at 401(k) plans, lowering the entry barrier to attract small and medium investors. Apollo Global Management is collaborating with State Street to launch target date funds (TDFs) that include private equity, designed specifically for retirement savings, balancing returns and risk control. BlackRock is also actively developing 401(k) products supporting crypto spot ETFs and real estate investment trusts (REITs), with its digital asset head Robert Mitchnick stating that they are conducting in-depth research and education with pension fund managers to help them understand crypto asset investment.
These state-level and institutional actions indicate that whether through local policy experiments or Wall Street's strategic layouts, efforts are underway to pave the way for 401(k) plans to open up to alternative assets. Cryptocurrencies, as a high-risk, high-reward asset class, are gradually being integrated into the U.S. retirement savings system.
Where is the capital flowing? New opportunities in the crypto track
The $9 trillion 401(k) asset base has opened up unprecedented incremental imagination for the crypto market. Even a small percentage of funds flowing in could significantly drive up the prices of mainstream crypto assets like Bitcoin and Ethereum. Especially, crypto spot ETFs, which have advantages in compliance, custody security, and liquidity, may become the first beneficiaries of this inflow.
Previously, in the new funding cycle led by institutions, assets with high liquidity and strong transparency were more likely to be favored. In addition to Bitcoin and Ethereum spot ETFs, projects like SOL, XRP, LTC, and DOGE also have a high probability of obtaining ETF approval, thereby benefiting from this wave of pension inflow.
Market disputes and risk warnings
Despite the market enthusiasm, academia and regulators have expressed strong concerns about the high-risk characteristics of alternative assets.
Jeffrey Hooke, a professor at Johns Hopkins University, bluntly states that including private equity and cryptocurrencies in 401(k) plans is a "bad idea." He points out that private equity has poor liquidity and high fees, and long-term returns may not outperform traditional stock markets; while cryptocurrencies, due to their extreme volatility (for example, Bitcoin plummeted over 60% in 2022) and relatively short history, are difficult to rely on as a stable choice for retirement savings.
Jerry Schlichter, a partner at law firm Schlichter Bogard, which specializes in high-fee 401(k) litigation, warns: "The retirement goal for ordinary people is safety and stability. Cryptocurrencies are fraught with unknown risks and exhibit extreme volatility in the short to medium term, making them unsuitable as core retirement assets."
Democrats are also cautious about the policy. Senator Elizabeth Warren and others criticize the regulatory framework of the (Genius Act) as too lenient, fearing that allowing large companies to issue private cryptocurrencies may undermine the stability of the financial system. They describe ordinary savers as potentially becoming "guinea pigs for policy experiments" and call for stricter regulation and risk assessment.
Conclusion
Trump's executive order is opening an unprecedented policy door for the crypto and alternative asset industries. If tens of trillions of dollars in 401(k) funds flow in in batches, it will not only change the direction of capital flow but also enhance the legitimacy and voice of crypto assets within the mainstream financial system.
However, opportunities come with risks. The formulation of regulatory details, the popularization of market education, and the setting of investment ratios will determine the actual quality of this transformation. In the coming months, investors need to closely track the subsequent actions of the Department of Labor and the SEC, as well as the real pace of institutional fund deployment.
For the crypto market, this may be not only a funding feast but also a critical turning point for crypto assets to truly enter the mainstream financial stage.
