Millions of Americans saving for retirement through 401(k) accounts could soon have the option to invest in higher-risk private equity and cryptocurrency assets. This potential shift follows an executive order signed Thursday by President Donald Trump, which could open the door for these industries to tap into a retirement savings pool worth trillions.
The order instructs the Labor Department and other federal agencies to revise the definition of what qualifies as a permissible asset under 401(k) rules. While no immediate changes take effect, the agencies will need months or more to rewrite regulations. Once completed, employers could offer a wider range of mutual funds and alternative investments, including private equity, cryptocurrencies, and real estate.
Currently, retirement plans are governed by the Employee Retirement Income Security Act of 1974 (ERISA), which requires employers to offer options in the best interest of their workers—not Wall Street. Most 401(k) plans focus on stocks, bonds, and to a lesser extent, cash or widely traded commodities like gold.
The move is seen as a win for the $5 trillion private equity industry, which has long sought access to retirement funds, and for the cryptocurrency sector, whose leaders strongly supported Trump’s 2024 campaign in pursuit of broader public adoption. Bitcoin prices rose 2% Thursday to $116,542, nearly doubling since Trump’s election.
Under President Joe Biden, regulators had taken a cautious approach to cryptocurrency, citing its extreme volatility. Cryptocurrencies like bitcoin and ethereum can swing 10% in a single day, compared to 2% or 3% moves in the stock market, which are considered significant. For the crypto industry, qualifying under ERISA was a major goal. Coinbase, a leading U.S. crypto exchange, was among the companies backing Trump’s initiatives, and under his administration, the Securities and Exchange Commission dropped its lawsuit against the firm.
Crypto has proven especially popular among younger Americans. “It was inevitable that bitcoin would make its way into American 401(k)s,” said Cory Klippsten, CEO of Swan Bitcoin. “As fiduciaries realize bitcoin’s risk-adjusted upside over the long term, we’ll see growing allocations, especially from younger, tech-savvy workers who want hard money, not melting ice cubes.”
Private equity firms, which typically draw from high-net-worth individuals and large pension plans with long investment horizons, see the 401(k) market as a vast new opportunity. Blackstone CEO Steve Schwarzman has described gaining access to these assets as a “dream” for the industry. Previous administrations from both parties had resisted including private equity in retirement plans due to higher risks, costs, and reduced liquidity compared to traditional investments.
Even with new regulations, it will take time for major retirement providers like Fidelity, Vanguard, and T. Rowe Price to design suitable products. Employers may also be slow to adopt the expanded options, meaning it could be years before crypto and private equity become common in individual 401(k) plans.
“While Vanguard has not committed to launching a product for defined contribution plans, Vanguard is dedicated to educating retirement investors to ensure a clear understanding of the opportunities and risks of investing in private assets,” the company said in a statement.
