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Trump Poised to Open 401(k) Market to Crypto and Alternative Investments

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President Donald Trump is preparing to enact a significant shift in how Americans’ retirement savings are managed, with an executive order expected as soon as this week that would open the $9 trillion U.S. retirement market to investments in cryptocurrencies, gold, and private equity. This move aligns with Trump’s campaign promise to liberalise regulations on digital assets and his administration’s broader push to bring crypto into the financial mainstream.

Expanding Investment Horizons for 401(k) Plans

The forthcoming executive order is designed to broaden the spectrum of permissible investments within 401(k) plans beyond traditional stocks and bonds. This will allow for the inclusion of a diverse range of asset classes, including various digital assets, precious metals, and funds focused on corporate takeovers, private loans, and infrastructure deals. The order will instruct Washington regulatory agencies to identify and remove existing hurdles that currently prevent these alternative investments from being incorporated into professionally managed funds utilised by 401(k) savers.

This initiative builds on earlier steps by the Trump administration to ease restrictions on crypto in retirement accounts, notably the Department of Labour’s May decision to rescind a Biden-era effort that discouraged 401(k) administrators from offering cryptocurrency investment options. The recent passage of three crypto-related bills in the House of Representatives, strongly supported by Trump, further underscores his commitment to bolstering the digital asset industry.

Benefits for Private Capital and Potential Risks

Beyond cryptocurrencies, the executive order is expected to significantly benefit major private capital groups such as Blackstone, Apollo, and BlackRock. These firms have expressed ambitions to manage a larger share of ordinary Americans’ retirement savings and have already begun forming partnerships with large asset managers to prepare for this expanded market access. The order will notably ask the Department of Labour to consider establishing a “safe harbour” for retirement plan administrators, aiming to minimise their legal risks as they offer private investments to savers.

While proponents argue that opening the 401(k) market to alternative assets could lead to potentially higher returns and greater diversification for retirement savers, the move is not without its risks. Critics highlight that private investments often entail higher fees, are less liquid than public stocks, and can have less transparency in the valuation of fund assets. The push to direct savings into less liquid private assets also comes at a time when the private equity industry has faced challenges in raising new money from traditional institutional investors.

President Trump’s administration frames this move as a commitment to “restoring prosperity for everyday Americans and safeguarding their economic future,” although the full implications of such a radical shift in retirement savings management will unfold as regulatory agencies implement the executive order.

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