Author: Lacie Zhang, Researcher at Bitget Wallet
Introduction: On August 7, 2025, Eastern Time, an executive order from the White House may become another historic singularity that ignites the crypto market, following the Bitcoin spot ETF. U.S. President Trump signed the executive order, directing the Department of Labor to revise rules to officially include alternative assets such as cryptocurrencies, real estate, and private equity in the investment options for 401(k) retirement plans.
This not only concerns the $8.7 trillion 'lifeblood' of American citizens but may also pave the way for the second massive influx of institutional capital, laying an unprecedented compliance expressway. When the retirement accounts of tens of millions of Americans are directly linked to crypto assets, a profound transformation is brewing.
Next, let's explore this transformation together with the Bitget Wallet Research Institute.
1. The $8.7 trillion 'Golden Key': Why is 401(k) the key variable?
To understand the power of this transformation, one must first comprehend the 'C position' role of 401(k) in the U.S. pension system. The American pension system is like a three-legged gold tripod, collectively supporting the retirement lives of citizens:
The existing three-pillar pension system in the U.S. — Government + Employer + Individual Projects Government Social Security Employer-Sponsored Plans
(401(k) etc.)
Personal Retirement Plan
(IRA etc.)
Nature Public pension insurance operated by the government Employer-sponsored retirement savings plan Individually established retirement investment accounts Participation Mandatory, eligible employees must participate Voluntary Voluntary Funding source Payroll taxes (paid jointly by employees and employers) Employee pre-tax contributions, with employer matching Personal funds deposited Management Government unified management Managed by individual accounts Managed by individual accounts Investment options No personal choice Limited investment options provided by employers Individuals can freely choose investments Early withdrawals Not allowed Allowed but incurs a 10% penalty Allowed but incurs a 10% penalty Amount $8.9 trillion $12.2 trillion $16.8 trillion
Source: Fintax, not considering the corporate annuity reserves of insurance companies and private sector fixed-income guarantees
First Pillar: Government-led Social Security, similar to China's basic pension insurance, which is mandatory, but individuals do not have investment choice rights.
Second Pillar: Employer-initiated retirement plans, with 401(k) being the absolute mainstay. It is jointly funded by employees and employers. Although the investment options are preset by the employer, it has a broad coverage and stable cash flow, making it the core tool for the U.S. middle class to accumulate retirement wealth.
Third Pillar: Individual Retirement Accounts (IRA), entirely voluntarily established and managed by individuals, granting individuals great investment freedom, resembling an 'open professional market' that requires participants to actively research and make their own decisions.
According to data from the Investment Company Institute (ICI) for the first quarter of 2025, the total size of the U.S. pension market reaches a staggering $43.4 trillion. In this vast sea of funds, the portion that can genuinely be decided by individual investment decisions is about $29 trillion. Among this $29 trillion, the 401(k) plan accounts for $8.7 trillion, representing a staggering 30%. This enormous sum of money is the 'gold mine' targeted by this new policy.
U.S. 401(k) account balance by age group (as of 2024)
Age Group Average 401(k) Balance Median 401(k) Balance Under 25 $6,899 $1,948 25 to 34 $42,640 $16,255 35 to 44 $103,552 $39,958 45 to 54 $188,643 $67,796 55 to 64 $271,320 $95,642 65 and older $299,442 $95,425
Data Source: Vanguard (How America Saves 2024)
In its 2024 report, Vanguard depicted the national portrait of 401(k): the average account balance for all participants has reached $148,153. Particularly noteworthy is that as age increases, account balances rise exponentially, with the average balance for those aged 65 and older approaching $300,000. This means that 401(k) not only has a massive fund volume, but its holders also encompass the most purchasing power in American society among the middle-aged and elderly.
Previously, this massive sum had been strictly limited to traditional fields such as stocks, bonds, and mutual funds. Now, the Trump administration intends to equip it with a 'golden key' that can unlock the door to the world of cryptocurrency.
2. The Three Waves that Leverage the Future: How Does the New Policy Reshape the Crypto Market Landscape?
Including cryptocurrencies in the 401(k) investment category is not merely a simple influx of funds; it is a structural transformation that interacts across three levels: users, institutions, and regulators.
1. The First Wave: The 'National-Level' Breaking of User Mindset
For the crypto industry, one of the biggest challenges has always been 'breaking out'—how to get the mainstream public, especially those with significant capital but conservative thinking among middle-aged and elderly investors, to accept and allocate crypto assets. This reform can be seen as a top-down 'national-level' market education.
Imagine when a 55-year-old American employee sees 'crypto asset allocation fund' listed alongside 'S&P 500 index fund' and 'U.S. Treasury bond fund' on the 401(k) investment menu provided by Fidelity or Vanguard, their psychological perception will undergo a disruptive change. This is no longer a distant and high-risk speculative code on social media; it is a compliant retirement investment product approved by the U.S. Department of Labor, packaged by top asset management institutions, and accepted by their employers. The dual endorsement of national sovereign credit and top financial institutions will greatly eliminate ordinary people's doubts and resistance towards crypto assets, achieving the lowest cost and broadest coverage of user cultivation.
2. The Second Wave: The 'Living Water' of Institutional Capital
If the approval of the Bitcoin spot ETF opened a door for institutional capital's proactive investment, then the access of 401(k) has opened a continuous 'automated water pipeline.' The flow of funds from ETFs largely depends on investors' proactive decisions and market sentiment, sometimes surging and sometimes calming. In contrast, the funding injection model of 401(k) is fundamentally different: it is directly linked to the vast U.S. national payroll system. This means that every payday, a portion of millions of salaries, with almost no awareness from the holders, will be automatically allocated to their selected crypto asset investment portfolios. This stable and massive incremental funding will provide the market with unprecedented depth and resilience.
This certain prospect will ignite a new round of product 'arms race' among Wall Street giants. Vanguard, Fidelity, and other institutions will not be satisfied with merely past singular crypto products but will turn to more diversified, structured, and risk-controllable '401(k) customized' crypto funds. For instance, an index fund that may include Bitcoin, Ethereum, and some blue-chip DeFi tokens, or a 'mixed allocation fund' that combines crypto assets with traditional stocks and bonds to smooth out volatility. This not only enriches the channels for capital entry but will also strongly promote the entire crypto asset management industry towards maturity and regulation.
3. The Third Wave: The 'Political Moat' Crossing Partisan Lines
However, the most profound step of this new policy may be hidden beneath the clamor of the financial markets—it aims to create a 'political moat' that can transcend partisan conflicts for the tumultuous world of cryptocurrency.
The policy uncertainty brought about by the alternation of the two parties in the U.S. has always hung over the crypto industry like the 'Sword of Damocles,' making any long-term capital hesitant. The oscillation of regulatory attitudes between the Democrats and Republicans, and even the policy differences between different leaders within the same party, have filled the industry's long-term development with variables. The brilliance of the 401(k) new policy lies in its deep binding of crypto assets with the 'lifeblood' of tens of millions of American voters. This fundamentally alters the nature of the game: crypto assets are no longer a topic exclusive to Wall Street and tech geeks, but have become 'everyone's cheese' that every ordinary household cannot ignore.
Envisioning the implementation of the new policy: Any future government attempting to impose strict crackdowns or even overturn existing cryptocurrency policies will face immense political pressure, as any measures that weaken the crypto market could be directly interpreted by voters as 'threatening my retirement funds,' thus triggering a severe political backlash. This blatant binding of interests elevates the protection of the crypto market from Trump's personal actions or partisan behavior to a 'forced choice' for candidates to court voters and for incumbents to protect national wealth. At this point, a solid moat has already formed, compelling both parties to seek more stable consensus on crypto regulation, allowing the entire industry to escape the fate of severe volatility due to party alternation, and truly cementing 'crypto-friendly' into America's long-term financial agenda.
3. Vision and Reflection: Opportunities and Challenges on the Path to a Trillion-Dollar Blue Ocean
For such a new policy, we have reason to remain optimistic. Just as the approval of the Bitcoin spot ETF propelled Bitcoin to surpass $100,000 within a year: the massive development of compliant products will inevitably trigger a re-evaluation of the value of underlying assets. Even assuming that initially only 5% of the 401(k) funds (about $400 billion) flow into the crypto market, this would still be a substantial amount for the current crypto industry, not to mention the enormous multiplier effect it would have on user cultivation and regulatory breakthroughs.
In the long-term vision, if personal-managed pensions can invest in crypto assets, could the much larger government-held social security funds also potentially open a door in the future? This would mean a restructuring of wealth and the financial system for the entire society.
But at the same time, optimism cannot replace thinking; we must remain cautious, as core challenges still exist:
Will investors buy it? Currently, over 60% of 401(k) assets are still concentrated in traditional mutual funds. It will take time and market validation to encourage Americans, who have been accustomed to decades of investment models, to invest their retirement funds in a highly volatile emerging market.
How to control risk? The severe cyclical volatility of crypto assets is the nemesis of retirement savings. How the Department of Labor, asset management institutions, and employers delineate investment ratios and conduct risk warnings to protect investor interests—these details will determine the success or failure of the policy.
What is the product form? The scope of investment determines the breadth of risk—whether to stick to Bitcoin and Ethereum or open up to a broader token market. Product design determines the depth of risk—how to smooth volatility to protect investors is the key issue that remains unresolved.
4. Conclusion
This executive order from the Trump administration is less of a final answer and more of a starting gun. It attempts to leverage the $8.7 trillion 401(k) to move not only the vast U.S. pension system but also the future landscape of global crypto finance. The path ahead has opportunities of vast blue waters, but also unknown reefs and treacherous shoals. However, when the most traditional and conservative capital of retirement funds begins to seriously examine the world of cryptocurrency, a door to a new era is slowly being pushed open.