"However, we must be clear that this is merely opening a door; the funds will not come in all at once. In the short term, its effect on market sentiment is greater than the actual inflow of funds. In the long run, its true value lies in the regulatory signals it releases: crypto assets are being considered within the most important wealth management system in the United States."
On August 7, 2025, U.S. President Donald Trump signed an executive order titled "Democratizing Access to Alternative Assets for 401(k) Investors" aimed at allowing all Americans participating in employer-sponsored retirement plans to enjoy alternative asset investment opportunities similar to those of institutional investors, including private equity, real estate, commodities, infrastructure projects, and digital assets (cryptocurrency). This initiative involves retirement funds totaling up to $12.5 trillion and could have a profound impact on markets such as crypto, private equity, and real estate.
What is 401(k)
401(k) is a type of employer-sponsored retirement savings plan in the United States, named after Section 401(k) of the Internal Revenue Code. Its core mechanism is: provided by the employer, voluntarily participated by employees, and encourages savings for retirement through tax benefits.
Basic Mechanism
Employer provides: the company opens a 401(k) account for employees.
Employee voluntary contributions: A certain percentage (e.g., 5%) is deducted from the salary and deposited into the account.
Tax incentives:
Traditional 401(k): Contributions are made pre-tax, and taxes are due upon withdrawal during retirement.
Roth 401(k): After-tax contributions, tax-free withdrawals in retirement.
Employer matching: Many companies will subsidize a certain percentage of the amount deposited by employees (for example, if the employee contributes 5%, the company matches 3%), which is one of the key attractions of the program.
Investment Methods
Autonomous selection: 401(k) The funds in the account can be invested in various targets, as determined by the account holder from the optional list provided by the plan provider (usually including various funds, ETFs, bonds, etc.).
Tax deferral: Investment earnings do not need to be taxed before retirement, allowing for compound growth.
Withdrawal Limits
Generally, you must be at least 59.5 years old to withdraw funds freely. Early withdrawals may incur taxes and a 10% penalty.
Scale and Importance
As of 2024, the total asset scale of the American 401(k) plan ranges between 8 to 12 trillion USD, making it the most important retirement savings tool for the American public. Its massive capital volume means that even minor changes in any investment policy could trigger significant market waves.
Core Content of the Executive Order
Policy Objectives
Unlock alternative asset investment opportunities for ordinary Americans, narrowing the gap between them and institutional investors in terms of investment channels and potential returns.
Encourage employers and plan providers to incorporate more diverse investment options into the 401(k) plan.
Involving asset types
Private Equity and Private Credit
Real estate and infrastructure
Commodities
Active managed digital asset investment tools (e.g., cryptocurrency funds, crypto ETFs, etc.)
Regulatory Arrangements
Request the Department of Labor (DOL) to provide "Safe Harbor" guidance under the Employee Retirement Income Security Act (ERISA) framework for plan sponsors (employers), clarifying the scope of their fiduciary duties to reduce litigation risks associated with offering alternative asset options.
Request the Securities and Exchange Commission (SEC), the Treasury Department, and other agencies to evaluate and adjust the "qualified investor" threshold to open compliant investment channels for ordinary retirement account investors.
Encourage the market to develop investment products suitable for retirement accounts, such as target date funds and collective investment trusts (CITs), to balance the risks and liquidity of alternative assets.
The Impact on Cryptocurrency
Analyzing from three dimensions: funding, compliance, and market sentiment:
Capital situation: Opens up the imaginative space for long-term capital, but the inflow process is slow.
Theoretical Capital Pool: The total scale of U.S. 401(k) and other defined contribution retirement plans is approximately $12.5 trillion. Theoretically, even if only 1% of the assets are allocated to the crypto space, it could bring in up to $125 billion in incremental funds.
The inflow depends on the choices of multiple parties: it must be clear that funds will not flow in automatically. The actual scale depends on whether the employer is willing to provide, whether the plan manager has launched the product, and whether employees actively choose to allocate. This is a long process of multi-party negotiation.
Long-term holding attributes: 401(k) Funds have strong long-term stability, and capital entering the cryptocurrency market is likely to become "patient capital", which helps reduce overall market selling pressure and volatility.
Landmark Event: BlackRock has announced plans to launch the first batch of crypto-related investment products for 401(k) in 2026, which could become a catalyst for the large-scale entry of crypto assets into U.S. retirement accounts.
Compliance: Obtain a formal "access certificate"
The executive order explicitly mentions "digital assets" for the first time in the federal-level long-term retirement investment policy, providing a strong institutional endorsement for cryptocurrency as a legitimate and configurable asset class.
This move will greatly promote the compliance process of financial products related to crypto assets, clearing the way for the SEC to approve more crypto ETFs or funds in the future.
Market sentiment: A short-term boost and the cornerstone of long-term confidence.
In the short term, this news will become an important catalyst for market sentiment and may trigger a wave of speculation around "compliance" and "institutional funds entering the market."
In the long run, institutional acceptance helps to enhance the overall trust in the market, attracting more traditional investors' attention and entry, and promoting the improvement of related infrastructure.
Opportunities and Challenges
Opportunity
Huge potential capital inflow: may reshape the funding structure of crypto assets, introducing more long-term, stable 'patient capital'.
Promote deep integration with traditional finance: making a key step for crypto assets from "alternative investments" to "mainstream asset allocation."
Fostering innovative compliance products: creating vast market space for asset management companies, custodians, and fintech companies.
Challenge
Complexity of Regulation and Law: The legal effect of executive orders is limited and easily overturned, mainly serving a guiding role. True institutionalization requires Congress to amend fundamental laws such as ERISA. Until then, uncertainty in policy remains.
The strong resistance of fiduciary responsibility: Employers, as fiduciaries of the 401(k) plan, are extremely sensitive to the introduction of highly volatile assets. For the sake of avoiding legal litigation and management costs, they will be the "final gatekeepers" for the inclusion of cryptocurrency options into the 401(k), and their acceptance process may be very slow.
Investor Behavioral Inertia and the Education Gap: Most 401(k) participants are not professional investors and tend to choose default low-risk portfolios (such as target date funds) with little change. Encouraging them to actively choose high-risk crypto assets requires large-scale and effective investor education.
Limitations of the product itself: Cryptographic assets generally have issues such as high volatility, complex valuation, and high transaction costs. Designing a product that can both reflect market returns and meet the requirements of retirement accounts for risk control and low costs is a core challenge faced by asset management companies.
V. Conclusion
From the push for Bitcoin reserve bills in New Hampshire and Texas to the recent federal executive order, the U.S. is gradually paving the way for the integration of crypto assets into the mainstream financial system. This executive order signed by Trump is undoubtedly a milestone event in the institutionalization and mainstreaming of cryptocurrency.
However, we must be clear that this is only the opening of a door; funding will not happen overnight. In the short term, its effect on market sentiment is greater than the actual inflow of funds. In the long run, its true value lies in the regulatory signals it releases: crypto assets are being considered within the most important wealth management system in the United States.
In the future, the actual scale of capital inflow will depend on the implementation of regulatory details, the richness of compliant products, the willingness of employers to accept them, and ultimately the independent choices of each ordinary investor. This path is still long, but the direction has become clearer than ever.
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Web3 Compliance Hotspots | Pensions Entering the Market? Trump Opens Up 401(k) Investment in encryption, what is the impact?
Written by: Hao Yicheng
"However, we must be clear that this is merely opening a door; the funds will not come in all at once. In the short term, its effect on market sentiment is greater than the actual inflow of funds. In the long run, its true value lies in the regulatory signals it releases: crypto assets are being considered within the most important wealth management system in the United States."
On August 7, 2025, U.S. President Donald Trump signed an executive order titled "Democratizing Access to Alternative Assets for 401(k) Investors" aimed at allowing all Americans participating in employer-sponsored retirement plans to enjoy alternative asset investment opportunities similar to those of institutional investors, including private equity, real estate, commodities, infrastructure projects, and digital assets (cryptocurrency). This initiative involves retirement funds totaling up to $12.5 trillion and could have a profound impact on markets such as crypto, private equity, and real estate.
401(k) is a type of employer-sponsored retirement savings plan in the United States, named after Section 401(k) of the Internal Revenue Code. Its core mechanism is: provided by the employer, voluntarily participated by employees, and encourages savings for retirement through tax benefits.
Employer provides: the company opens a 401(k) account for employees.
Employee voluntary contributions: A certain percentage (e.g., 5%) is deducted from the salary and deposited into the account.
Tax incentives:
Traditional 401(k): Contributions are made pre-tax, and taxes are due upon withdrawal during retirement.
Roth 401(k): After-tax contributions, tax-free withdrawals in retirement.
Employer matching: Many companies will subsidize a certain percentage of the amount deposited by employees (for example, if the employee contributes 5%, the company matches 3%), which is one of the key attractions of the program.
Autonomous selection: 401(k) The funds in the account can be invested in various targets, as determined by the account holder from the optional list provided by the plan provider (usually including various funds, ETFs, bonds, etc.).
Tax deferral: Investment earnings do not need to be taxed before retirement, allowing for compound growth.
Generally, you must be at least 59.5 years old to withdraw funds freely. Early withdrawals may incur taxes and a 10% penalty.
As of 2024, the total asset scale of the American 401(k) plan ranges between 8 to 12 trillion USD, making it the most important retirement savings tool for the American public. Its massive capital volume means that even minor changes in any investment policy could trigger significant market waves.
Core Content of the Executive Order
Policy Objectives
Unlock alternative asset investment opportunities for ordinary Americans, narrowing the gap between them and institutional investors in terms of investment channels and potential returns.
Encourage employers and plan providers to incorporate more diverse investment options into the 401(k) plan.
Private Equity and Private Credit
Real estate and infrastructure
Commodities
Active managed digital asset investment tools (e.g., cryptocurrency funds, crypto ETFs, etc.)
Request the Department of Labor (DOL) to provide "Safe Harbor" guidance under the Employee Retirement Income Security Act (ERISA) framework for plan sponsors (employers), clarifying the scope of their fiduciary duties to reduce litigation risks associated with offering alternative asset options.
Request the Securities and Exchange Commission (SEC), the Treasury Department, and other agencies to evaluate and adjust the "qualified investor" threshold to open compliant investment channels for ordinary retirement account investors.
Encourage the market to develop investment products suitable for retirement accounts, such as target date funds and collective investment trusts (CITs), to balance the risks and liquidity of alternative assets.
Analyzing from three dimensions: funding, compliance, and market sentiment:
Theoretical Capital Pool: The total scale of U.S. 401(k) and other defined contribution retirement plans is approximately $12.5 trillion. Theoretically, even if only 1% of the assets are allocated to the crypto space, it could bring in up to $125 billion in incremental funds.
The inflow depends on the choices of multiple parties: it must be clear that funds will not flow in automatically. The actual scale depends on whether the employer is willing to provide, whether the plan manager has launched the product, and whether employees actively choose to allocate. This is a long process of multi-party negotiation.
Long-term holding attributes: 401(k) Funds have strong long-term stability, and capital entering the cryptocurrency market is likely to become "patient capital", which helps reduce overall market selling pressure and volatility.
Landmark Event: BlackRock has announced plans to launch the first batch of crypto-related investment products for 401(k) in 2026, which could become a catalyst for the large-scale entry of crypto assets into U.S. retirement accounts.
The executive order explicitly mentions "digital assets" for the first time in the federal-level long-term retirement investment policy, providing a strong institutional endorsement for cryptocurrency as a legitimate and configurable asset class.
This move will greatly promote the compliance process of financial products related to crypto assets, clearing the way for the SEC to approve more crypto ETFs or funds in the future.
In the short term, this news will become an important catalyst for market sentiment and may trigger a wave of speculation around "compliance" and "institutional funds entering the market."
In the long run, institutional acceptance helps to enhance the overall trust in the market, attracting more traditional investors' attention and entry, and promoting the improvement of related infrastructure.
Opportunities and Challenges
Opportunity
Huge potential capital inflow: may reshape the funding structure of crypto assets, introducing more long-term, stable 'patient capital'.
Promote deep integration with traditional finance: making a key step for crypto assets from "alternative investments" to "mainstream asset allocation."
Fostering innovative compliance products: creating vast market space for asset management companies, custodians, and fintech companies.
Complexity of Regulation and Law: The legal effect of executive orders is limited and easily overturned, mainly serving a guiding role. True institutionalization requires Congress to amend fundamental laws such as ERISA. Until then, uncertainty in policy remains.
The strong resistance of fiduciary responsibility: Employers, as fiduciaries of the 401(k) plan, are extremely sensitive to the introduction of highly volatile assets. For the sake of avoiding legal litigation and management costs, they will be the "final gatekeepers" for the inclusion of cryptocurrency options into the 401(k), and their acceptance process may be very slow.
Investor Behavioral Inertia and the Education Gap: Most 401(k) participants are not professional investors and tend to choose default low-risk portfolios (such as target date funds) with little change. Encouraging them to actively choose high-risk crypto assets requires large-scale and effective investor education.
Limitations of the product itself: Cryptographic assets generally have issues such as high volatility, complex valuation, and high transaction costs. Designing a product that can both reflect market returns and meet the requirements of retirement accounts for risk control and low costs is a core challenge faced by asset management companies.
V. Conclusion
From the push for Bitcoin reserve bills in New Hampshire and Texas to the recent federal executive order, the U.S. is gradually paving the way for the integration of crypto assets into the mainstream financial system. This executive order signed by Trump is undoubtedly a milestone event in the institutionalization and mainstreaming of cryptocurrency.
However, we must be clear that this is only the opening of a door; funding will not happen overnight. In the short term, its effect on market sentiment is greater than the actual inflow of funds. In the long run, its true value lies in the regulatory signals it releases: crypto assets are being considered within the most important wealth management system in the United States.
In the future, the actual scale of capital inflow will depend on the implementation of regulatory details, the richness of compliant products, the willingness of employers to accept them, and ultimately the independent choices of each ordinary investor. This path is still long, but the direction has become clearer than ever.