12 trillion yuan in huge capital may flow into the cryptocurrency market, revealing the US 401K plan
On August 9, Trump signed an executive order requiring the Departments of Labor, Treasury, and SEC to relax investment restrictions on 401K retirement savings plans, allowing alternative assets like cryptocurrencies, real estate, and private equity to be included in the investment scope. This policy will open up the US pension market worth $12.5 trillion, bringing unprecedented liquidity to the cryptocurrency sector.
The 401K plan originated from the 401K section of the Internal Revenue Code in 1978, first implemented by consultant Ted Benna in 1980. The plan adopts an "employee self-contribution, employer matching" mechanism and has now covered over 70 million Americans. The annual contribution limit for individuals is $23,500 (an additional $7,500 for those over 50), and early withdrawals incur a 10% penalty. Traditional 401K portfolios include five types of assets: stocks (38%), bonds, target-date funds, stable value funds, and employer stock, with investment choices entirely determined by the employer's preset list.
The core of this policy adjustment is to break the existing investment restrictions. In 2022, the US Department of Labor had issued guidance requiring "extreme caution" regarding cryptocurrency investments but has recently rescinded this restriction. The new policy does not take effect immediately but requires regulatory agencies to initiate evaluation and amendment processes. If only 1% of 401K funds (about $125 billion) flow into the cryptocurrency market, it will significantly enhance its market value and liquidity.
This initiative is consistent with Trump’s strategy to promote US dominance in the cryptocurrency industry. Recently, countries like Pakistan, South Africa, and Ghana have begun to recognize cryptocurrencies, and with this policy adjustment, the US may trigger a chain reaction of changes in global pension investment models.
