Trump Opens Door for 401(k) Retirement Plans to Invest in Private Equity and Cryptocurrency
August 7, 2025 | By Ken Sweet, Associated Press
In a move that could reshape retirement investing for millions of Americans, President Donald Trump signed an executive order on Thursday that may allow 401(k) retirement plans to include higher-risk investments such as private equity and cryptocurrencies. This initiative has the potential to grant private equity and crypto industries access to trillions of dollars currently held in these retirement accounts.
What the Executive Order Entails
While there is no immediate change to how individuals invest their 401(k) savings, the executive order directs federal agencies—including the Department of Labor—to revisit and rewrite existing rules concerning what qualifies as permissible 401(k) investment assets. This regulatory overhaul is expected to take months or longer.
Once new guidelines are established, employers would be authorized to offer their employees a broader range of investment options, including alternative assets like private equity, cryptocurrencies, and real estate funds. Currently, 401(k) plans primarily offer mutual funds that invest in stocks, bonds, and, to a lesser degree, cash or commodities such as gold.
Background on 401(k) Rules and ERISA
American retirement accounts such as 401(k) plans fall under the Employee Retirement Income Security Act of 1974 (ERISA), a law designed to protect workers’ retirement savings by requiring employers to act in their employees’ best interests. Historically, private equity investments—which tend to be riskier, less liquid, and carry higher fees—and highly volatile assets like cryptocurrencies have been excluded from these plans.
Industry Reactions and Political Context
The private equity sector, valued at approximately $5 trillion, has long sought access to 401(k) money. Blackstone CEO Steve Schwarzman once described attaining such access as an industry “dream.” Likewise, the cryptocurrency industry, which heavily supported Trump’s 2024 presidential campaign through donations and advocacy, views the order as a significant step toward mainstream acceptance.
Cryptocurrency companies like Coinbase, a major donor to Trump’s military parade in Washington this summer, stand to benefit. Under the Biden administration, regulators approached crypto investments with caution due to their extreme price volatility; cryptocurrencies such as bitcoin can swing 10% or more within a single day, unlike the historically stable stock market, where a 2-3% daily move is considered exceptional.
According to data reported Thursday, the price of bitcoin rose 2% to $116,542, nearly doubling since Trump’s election.
Potential Impact on Retirement Savers
Supporters argue that allowing private equity and cryptocurrency options could diversify retirement portfolios and potentially improve long-term returns. Historical data suggests private equity has yielded average annual net returns around 13% since 1990, compared to roughly 10.6% annual returns for the S&P 500 index over the same period.
However, private equity investments often require locking up capital for several years and carry higher risks, while cryptocurrencies are known for their unpredictable price fluctuations. Experts caution that these characteristics could lead to greater volatility in retirement accounts traditionally regarded as prudent savings vehicles.
“It was inevitable that bitcoin would make its way into American 401(k)s,” said Cory Klippsten, CEO of Swan Bitcoin. He noted that younger, tech-savvy investors favor cryptocurrencies for their “hard money” attributes compared to fading fiat currencies.
Industry Perspectives and Next Steps
Bryan Corbett, president and CEO of the Managed Funds Association representing private equity interests, expressed optimism: “We look forward to working with the Trump Administration on a thoughtful framework that expands access to alternatives for retirement savers, offering Americans more diversification and investment options with appropriate investor guardrails.”
Major retirement plan providers such as Fidelity, Vanguard, and T. Rowe Price will require time to develop suitable funds incorporating these alternative assets. Moreover, employers will likely be cautious about quickly revising plan offerings. Vanguard, while not currently committed to launching related retirement products, emphasized its dedication to educating investors on the risks and opportunities of private assets.
Challenges Ahead
Despite the executive order, broad adoption of private equity and cryptocurrency investments within 401(k) plans could take years. Regulatory changes must be finalized, product providers must create compliant investment options, and plan sponsors must be comfortable incorporating such choices into their offerings.
Critics warn that adding highly volatile or illiquid investments to retirement plans might expose savers to risks that run counter to the fundamental goal of preserving and steadily growing retirement capital.
As this policy evolves, millions of Americans will watch closely to see if these emerging asset classes find a place in their retirement portfolios—and whether the promise of higher returns outweighs the potential pitfalls.
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