Trump to Open 401(k) Plans to Cryptocurrency Investments

The move affects $12.5 trillion in retirement savings held across the country. Currently, most workers can only put their retirement money into traditional stocks and bonds through their workplace plans.

Trump’s order tells the Department of Labor to review rules that govern 401(k) plans under ERISA, the federal law that sets retirement plan standards. The Labor Department will work with the Treasury and Securities and Exchange Commission to create new guidelines.

The order covers more than just crypto. Workers could also invest in private equity, real estate, and other alternative assets that wealthy investors have used for years. These options have been off-limits to regular retirement savers until now.

Plan administrators will get legal protections called “safe harbor” rules. These protections limit their liability when offering riskier investment options to employees.

Bitcoin’s price jumped to $116,000 after news of the order broke, gaining over $2,000 in just one hour. Trading volume spiked to $30 billion as investors bought into the news.

Cryptocurrency stocks also rallied. Coinbase shares rose 3%, while Galaxy Digital gained 6%. The market reaction shows investors believe retirement account access could drive massive new demand for digital assets.

Even small allocations from the $8.9 trillion 401(k) market could push billions of dollars into cryptocurrencies. Asset managers see huge opportunity if retirement plans start offering crypto options.

Major financial firms have already started preparing products for this shift. BlackRock announced it will launch a 401(k) target-date fund in 2026 that includes 5% to 20% in private investments. Apollo Global Management and Blackstone are working with retirement plan providers to create new options.

BlackRock CEO Larry Fink argues that giving retirement savers access to alternative assets could boost returns by up to 15% compared to traditional investments. The company manages over $3.5 trillion in funds globally.

This builds on policy changes Trump made earlier. In May, the Labor Department removed Biden-era guidance that warned plan managers to use “extreme care” before adding crypto to retirement menus.

Financial experts have raised major concerns about putting crypto in retirement accounts. A Government Accountability Office study found Bitcoin was four times more volatile than the S&P 500 stock index between 2021 and 2023. Other digital assets like Solana showed even higher volatility.

“People saving for retirement should probably be even more conservative, because adding crypto to a 401(k) plan would significantly increase the risk that your retirement nest egg could suffer a large loss at the wrong time,” said Amy Arnott, a portfolio strategist with Morningstar Research Services.

The Center for Retirement Research at Boston College called Bitcoin in 401(k) plans “a terrible idea.” Researchers said participants don’t understand the risks and that alternative investments rarely improve returns for average investors.

The Department of Labor previously warned about crypto’s risks, citing extreme price swings, valuation problems, and potential for fraud and theft. Under federal law, plan managers must act in workers’ best interests and meet the “highest standard of care known to law.”

Senator Elizabeth Warren warned that private investments lack transparency and make “unsubstantiated claims of high returns.” Legal expert Jerry Schlichter called private equity for 401(k)s “a minefield of danger” for plan administrators.

The U.S. wouldn’t be first to allow pension funds into crypto. Japan’s Government Pension Investment Fund, the world’s largest with $1.5 trillion, began exploring Bitcoin allocations in 2024. Some U.S. pension funds have already tested crypto. The Houston Firefighters’ Relief and Retirement Fund invested $25 million in Bitcoin and Ethereum in 2021.

However, experts expect changes to roll out slowly. Plan sponsors will likely start with small allocations rather than letting workers put entire portfolios into crypto or private equity. The executive order starts a review process that could take months to complete.

Some lawyers are already preparing legal challenges based on investor protection and fiduciary duty concerns. The order gives agencies broad discretion in how they implement the changes.

Trump’s order represents the biggest shift in retirement investing in decades. It could legitimize cryptocurrency as a mainstream retirement asset and give millions of Americans new investment options.

The crypto industry has donated over $26 million to Trump’s political operation this year, showing strong support for his pro-crypto policies. This order delivers on campaign promises to make America the “crypto capital of the world.”

The immediate market reaction shows investor optimism, but the real test comes as the policy details emerge and Americans decide whether to put their retirement security into cryptocurrency.