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Trump signs order to allow crypto and real estate investments in retirement plans
Experts say allowing alternative assets like cryptocurrency in 401(k) portfolios carries a high degree of risk. Donald Trump signed an executive order on Thursday that aims to allow cryptocurrency and other alternative assets like private equity and real estate to be included in the investments in 401(k) retirement accounts.The order smooths the way for fund managers to tap into trillions of dollars of Americans’ retirement savings. It could open up a vast new funding source to managers of so-called alternative assets outside stocks, bonds and cash, though critics say it also could bring too much risk into retirement investments. Such a move would be a boon for big alternative asset managers by opening the $12tn market for retirement funds, known as defined contribution plans, to their investments.Trump’s executive order is part of his administration’s broader embrace of the cryptocurrency lobby and rollback of regulations on digital currencies. Formerly a skeptic about crypto who said bitcoin “seemed like a scam”, Trump has this year launched his own lucrative cryptocurrency enterprise, courted crypto supporters and promised to make the US into the “crypto capital of the world”. “A combination of regulatory overreach and encouragement of lawsuits filed by opportunistic trial lawyers has stifled investment innovation,” Trump said in the order. “My Administration will relieve the regulatory burdens and litigation risk that impede American workers’ retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement.”There is concern among some analysts that allowing cryptocurrency to be included in 401(k) contributions carries a high degree of risk, however, given that crypto is inherently speculative and in recent years has been the subject of rampant fraud.“Opening up the $9tn 401(k) industry to alternative assets overall is reasonable (..)