Written by: Lacie Zhang, Researcher at Bitget Wallet
Introduction: On August 7, 2025, Eastern Time, an executive order from the White House may become another historic turning point for the crypto market, following the approval of Bitcoin spot ETFs. President Trump signed an executive order directing the Department of Labor to revise rules to officially include alternative assets such as cryptocurrencies, real estate, and private equity into the investment options of 401(k) pension plans.
This not only concerns the $8.7 trillion 'livelihood money' of Americans but may also pave an unprecedented compliant highway for a second large-scale entry of institutional capital. 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 the 401(k) a Key Variable?
To understand the power of this transformation, one must first recognize the 'C position' role of the 401(k) in the US pension system. The US pension system is like a three-legged gold tripod, supporting the retirement life of its citizens.
Source: Fintax, not considering the corporate annuity reserves of insurance companies or private sector fixed-income guarantees.
First Pillar: Government-led Social Security, similar to China's basic pension insurance, which is mandatory but does not give individuals investment choices.
Second Pillar: Employer-sponsored retirement plans, with the 401(k) being the dominant force. It is jointly funded by employees and employers, and while the investment options are preset by the employer, it has a broad coverage and stable funding, making it a core tool for the American middle class to accumulate retirement wealth.
Third Pillar: Individual Retirement Accounts (IRA), which are completely voluntarily opened and managed by individuals, granting them great investment freedom, resembling an 'open professional market' where participants must actively research and make their own decisions.
According to the Investment Company Institute (ICI) data for the first quarter of 2025, the total size of the US pension market has reached $43.4 trillion. In this vast sea of funds, the portion that individuals can truly make investment decisions on is about $29 trillion. Among this $29 trillion, the 401(k) plan alone accounts for $8.7 trillion, representing 30%. This massive amount of capital is the 'gold mine' targeted by this new policy.
The balance situation of US 401(k) accounts by age group (as of 2024)
Source: Vanguard (How America Saves 2024)
Vanguard's report in 2024 depicts a national portrait of 401(k): the average account balance of all participants has reached $148,153. Notably, as age increases, the account balance rises exponentially, with an average balance close to $300,000 for those aged 65 and above. This means that 401(k) not only has a large amount of funds, but its holders also encompass the most purchasing power among the middle-aged and elderly in American society.
Previously, this huge capital had been strictly restricted to traditional stocks, bonds, and mutual funds. Now, the Trump administration intends to equip it with a 'golden key' that can unlock the door to the crypto world.
2. The Threefold Wave to Leverage the Future: How the New Policy Reshapes the Crypto Market Landscape?
Incorporating cryptocurrencies into 401(k) investment categories will not simply result in capital inflows, but will trigger a structural transformation involving users, institutions, and regulators at three levels.
1. The First Wave: A 'National-level' Breakthrough in User Mindset
One of the biggest challenges for the crypto industry has always been 'breaking out'—how to get the mainstream public, especially those with substantial wealth but conservative mindsets 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 a 55-year-old American employee seeing 'Crypto Asset Allocation Fund' listed alongside 'S&P 500 Index Fund' and 'US Treasury Fund' on the 401(k) investment menu provided by Fidelity or Vanguard; their psychological experience will undergo a disruptive change. This is no longer a distant and high-risk speculative code on social media, but a compliant retirement investment product approved by the US 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, completing a user cultivation process that is cost-effective and widely covered.
2. The Second Wave: The 'Living Water' of Institutional Capital
If the approval of Bitcoin spot ETFs opened a door for institutional capital to engage in proactive investments, then the access to 401(k) opens a continuous 'automated water pipeline'. The funding flow of ETFs largely depends on investors' proactive decisions and market sentiment, sometimes surging and sometimes calming. The funding injection model of 401(k) is fundamentally different: it is directly tied to the vast national payroll system of the US. This means that every payday, a portion of millions of salaries will be automatically allocated to the selected crypto asset investment portfolio with little awareness from the holders. This stable and massive incremental capital will provide unprecedented depth and resilience to the market.
This certain prospect will ignite a new round of product 'arms race' among Wall Street giants. Institutions like Vanguard and Fidelity will not just be satisfied with the past single crypto products; instead, they will shift towards more diversified, structured, and risk-controlled '401(k) customized' crypto funds. For example, a 'basket' 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 standardization.
3. The Third Wave: The 'Political Moat' Across Partisan Lines
However, the most profound step of this new policy may be hidden beneath the clamor of the financial market—it aims to create a 'political moat' that can cross partisan disputes for the turbulent crypto world.
The policy uncertainty brought by the alternating control of the two major parties in the US has always been a 'sword of Damocles' hanging over the crypto industry, causing any long-term capital to be filled with concerns. The swings in regulatory attitudes between the Democratic and Republican parties, even among different leaders within the same party, have made the long-term development of the industry full of variables. The brilliance of the new 401(k) policy lies in its deep binding with the 'livelihood money' of tens of millions of American voters. This fundamentally changes the nature of the game: crypto assets are no longer exclusive topics for Wall Street and tech geeks, but have become 'national cheese' that every ordinary family cannot ignore.
Envisioning the implementation of the new policy: any future government attempting to impose strict suppression or even overturn existing crypto policies will face immense political pressure, as any attempt to undermine the crypto market may be directly interpreted by voters as 'touching my retirement funds', potentially triggering a severe political backlash. This naked interest binding elevates the protection of the crypto market from being simply a personal or partisan action by Trump to a 'forced choice' for candidates to attract voters and for incumbents to protect national wealth. Thus, a solid moat has formed, compelling both parties to seek a more stable consensus on crypto regulation, allowing the entire industry to escape the fate of extreme fluctuations due to party alternation and truly integrate '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
We have reason to remain optimistic about this new policy. Just as the approval of Bitcoin spot ETFs pushed Bitcoin to break the $100,000 mark within a year: the massive growth of compliant products will inevitably trigger a reassessment of the value of underlying assets. Even assuming that only 5% of 401(k) funds (about $400 billion) flow into the crypto market initially, this would still be a massive amount of capital for the current crypto industry, not to mention the significant multiplier effect it would have on user cultivation and regulatory breakthroughs.
In the long run, if individually managed pensions can invest in crypto assets, could the larger social security fund held by the government also open a door in the future? That would be a reconstruction of wealth and the financial system for the entire society.
However, optimism cannot replace critical thinking; we must also remain cautious, as core challenges still exist:
Will investors buy in? Currently, over 60% of 401(k) assets are still concentrated in traditional mutual funds. It will take time and market validation for 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 define investment ratios and conduct risk warnings to protect investors' interests—these details will determine the success or failure of the policy.
What is the product form? The investment scope determines the breadth of risk—whether it remains focused on Bitcoin and Ethereum or opens up to a broader token market. Product design then determines the depth of risk—how to smooth volatility to protect investors is the key issue yet to be resolved.
4. Conclusion
The Trump administration's executive order is less of a final answer and more of a starting gun. It uses the $8.7 trillion 401(k) as a fulcrum, attempting to leverage not only the vast US pension system but also the future landscape of global crypto finance. The road ahead is filled with opportunities and uncharted reefs. However, when the most traditional and conservative capital, retirement funds, begins to seriously examine the crypto world, a new era's door is slowly being opened.
