A Battle for \(12.5 Trillion in Retirement Funds Looms A battle for \)12.5 trillion in retirement funds is about to begin.

This policy, aimed at allowing alternative assets such as private equity, real estate, and cryptocurrencies into 401(k) retirement accounts, is not only a key step for the Trump administration to reshape capital market rules but also reflects the underlying logic of the U.S. financial industry.

Trump to Allow Cryptocurrencies and Other Alternative Assets in 401(k) Plans

On August 7, Bloomberg reported that U.S. President Trump will sign an executive order on Thursday to allow private equity, real estate, cryptocurrencies, and other alternative assets into 401(k) plans, which are valued at approximately $12.5 trillion.

Bloomberg cited an unnamed source who spoke on condition of anonymity before the official release of the executive order, stating that the order will direct the Department of Labor to reassess guidelines for investing in alternative assets in retirement plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The department will also be responsible for clarifying the government's position on fiduciary responsibilities regarding the provision of asset allocation funds that include alternative assets.

Of greater concern is the establishment of an interdepartmental collaboration mechanism. Trump has instructed the Secretary of Labor to work with the Treasury Department, the U.S. Securities and Exchange Commission (SEC), and other agencies to assess the need for rule changes to advance this effort, with a specific request for the SEC to provide a convenient channel for participants in self-managed retirement plans to access alternative assets.

This directive for multi-agency collaboration is clearly intended to break through existing regulatory barriers and clear the way for large-scale entry of alternative assets into the retirement market.

What Is a 401(k) Plan?

The U.S. 401(k) plan is not a traditional retirement fund plan but an employer-sponsored retirement savings plan that allows employees to choose to have their employer deposit a portion of their salary into a personal account under the plan for retirement savings. Additionally, employers typically provide matching contributions at a certain percentage. Funds can be invested in low-risk assets such as mutual funds and stocks.

In 2025, employees can contribute a maximum of \(23,500 per year, with those aged 50 and above allowed to add an additional \)7,500, and individuals aged 60-63 able to contribute up to \(11,250. Employer matching contributions vary by plan. The total contribution limit for employees and employers is \)70,000 (other calculation methods may also apply). Early withdrawal of funds may be subject to a 10% penalty (unless specific exceptions are met), and withdrawals after retirement are taxed as ordinary income.

How Large Is the 401(k) Market? What Impact on Crypto?

The 401(k) plan is the primary employer-sponsored retirement savings plan in the United States. According to a report released by the Investment Company Institute (ICI) in June this year, as of March 31, 2025, total U.S. retirement assets amounted to \(43.4 trillion (accounting for 34% of total U.S. household financial assets), of which individual retirement account (IRA) assets totaled \)16.8 trillion. Americans held \(12.2 trillion in all employer-sponsored defined contribution (DC) retirement plans, with 401(k) plans holding \)8.7 trillion.

Within 401(k) plans, as of the end of March, mutual funds managed \(5.3 trillion in 401(k) plan assets, accounting for 61% of total 401(k) plan assets. Equity funds were the most common type of fund in 401(k) plans, holding \)3.2 trillion (36.7%), followed by hybrid funds, holding $1.4 trillion.

It is currently unknown whether the new executive order will restrict the proportion, type, or specific currencies of cryptocurrency investments. However, once the policy is implemented, if just 1% of the \(8.7 trillion in 401(k) funds flows into the crypto market, it would bring \)87 billion in inflows. If all of this were used to purchase Bitcoin, it would generate demand for approximately 748,000 BTC, and if all were for Ethereum, the demand would be around 22.6 million ETH.

Driven by Both Politics and Capital

This move is a continuation and upgrade of Trump's economic policy. According to Bloomberg, during Trump's first term, the Department of Labor introduced a similar policy allowing private equity in retirement plans, which was later revoked by the Biden administration. Now, Trump is restarting and expanding the scope, attempting to clear obstacles through executive orders and collaboration among multiple regulatory agencies.

Trump's move is not purely an economic decision but also aimed at continuing to gain support from Wall Street. Private equity and hedge funds have long been important financial backers of the Republican Party. Relaxing 401(k) investment restrictions means these institutions will receive long-term and stable capital inflows. Additionally, Trump has recently made frequent statements in support of cryptocurrencies, proposing the establishment of a Strategic Bitcoin Reserve and a Digital Asset Stockpile. This policy directly responds to the core demand of the crypto community—for mainstream financial systems to embrace digital assets.

Opening the "Pandora's Box" of Retirement Funds

The core of this executive order is to break the investment boundaries of traditional retirement accounts. Under ERISA, U.S. 401(k) plans have long been dominated by traditional assets such as stocks and bonds, with alternative assets excluded due to their poor liquidity, complex valuation, and other characteristics.

Supporters view this as a "democratization" process of capital markets, believing it will allow working-class individuals to share in the dividends of economic growth, inject long-term stable funds into the alternative asset industry, and provide an opportunity for emerging assets like cryptocurrencies to gain mainstream acceptance.

However, for the working class, this executive order is both an opportunity to "break investment barriers" and a challenge of "risk spillover."

The essential attribute of retirement accounts is to preserve and increase value, which fundamentally conflicts with the high risk of alternative assets. These characteristics naturally contradict the liquidity needs and risk tolerance of retirement funds. Most working-class individuals lack financial expertise and struggle to identify the true risks of assets, potentially relying on "packaged products" recommended by employers or financial institutions. Driven by interests, institutions may tend to exaggerate returns and downplay risks, leading working-class individuals to passively bear excessive risks due to information asymmetry.

U.S. Crypto Policy Package

The Trump administration has recently released a series of friendly signals, including appointing the first White House Director of AI and Cryptocurrencies, designating cryptocurrencies as a national priority, establishing a Strategic Bitcoin Reserve, holding a "Crypto Week," signing the stablecoin bill "GENIUS Act," and releasing the report "Strengthening U.S. Leadership in Digital Financial Technologies," forming a package of policies.

However, projects or companies led by members of his family, such as World Liberty Financial (WLFI) and American Bitcoin, as well as Trump's own social media platform Truth Social, which plans to launch utility tokens, have cast a shadow of potential conflicts of interest over this policy change.

It is worth noting that several U.S. states have previously proposed draft crypto reserve bills, planning to authorize investment of a portion of retirement funds, retirement systems, or public funds including retirement funds in Bitcoin. Most states limited this investment ratio to 10%, but most bills were rejected or stalled due to adjournments.

The White House Presidential Working Group on Digital Asset Markets also discussed state-level cryptocurrency regulation in its late July report "Strengthening U.S. Leadership in Digital Financial Technologies." Financial service agencies in some states have applied state-level money transmission laws to digital asset custodians and trading platforms, requiring intermediaries to register as money transmitters with the agency to serve clients in those states. Some states have excluded digital asset transactions from money transmission laws, allowing companies specializing in digital asset transactions to operate without licensing requirements in those states. Other states have established specialized regulatory regimes for digital assets. The report also noted in discussing the division of responsibilities among regulatory agencies that federal law should take precedence over state laws, unifying the applicability of regulations related to securities and commodities.

Conclusion

As 401 (k) accounts evolve from simple stock and bond portfolios to complex products including private equity and cryptocurrencies, financial literacy will become a key variable determining investment success or failure. Whether the regulatory system can establish effective firewalls to prevent interest and systemic risks will be the ultimate test of the governance capabilities of U.S. capital markets.

In the face of the huge $12.5 trillion pie, all participants are waiting for the final outcome of this capital game.

A Battle for \(12.5 Trillion in Retirement Funds Looms A battle for \)12.5 trillion in retirement funds is about to begin.

This policy, aimed at allowing alternative assets such as private equity, real estate, and cryptocurrencies into 401(k) retirement accounts, is not only a key step for the Trump administration to reshape capital market rules but also reflects the underlying logic of the U.S. financial industry.

Trump to Allow Cryptocurrencies and Other Alternative Assets in 401(k) Plans

On August 7, Bloomberg reported that U.S. President Trump will sign an executive order on Thursday to allow private equity, real estate, cryptocurrencies, and other alternative assets into 401(k) plans, which are valued at approximately $12.5 trillion.

Bloomberg cited an unnamed source who spoke on condition of anonymity before the official release of the executive order, stating that the order will direct the Department of Labor to reassess guidelines for investing in alternative assets in retirement plans governed by the Employee Retirement Income Security Act of 1974 (ERISA). The department will also be responsible for clarifying the government's position on fiduciary responsibilities regarding the provision of asset allocation funds that include alternative assets.

Of greater concern is the establishment of an interdepartmental collaboration mechanism. Trump has instructed the Secretary of Labor to work with the Treasury Department, the U.S. Securities and Exchange Commission (SEC), and other agencies to assess the need for rule changes to advance this effort, with a specific request for the SEC to provide a convenient channel for participants in self-managed retirement plans to access alternative assets.

This directive for multi-agency collaboration is clearly intended to break through existing regulatory barriers and clear the way for large-scale entry of alternative assets into the retirement market.

What Is a 401(k) Plan?

The U.S. 401(k) plan is not a traditional retirement fund plan but an employer-sponsored retirement savings plan that allows employees to choose to have their employer deposit a portion of their salary into a personal account under the plan for retirement savings. Additionally, employers typically provide matching contributions at a certain percentage. Funds can be invested in low-risk assets such as mutual funds and stocks.

In 2025, employees can contribute a maximum of \(23,500 per year, with those aged 50 and above allowed to add an additional \)7,500, and individuals aged 60-63 able to contribute up to \(11,250. Employer matching contributions vary by plan. The total contribution limit for employees and employers is \)70,000 (other calculation methods may also apply). Early withdrawal of funds may be subject to a 10% penalty (unless specific exceptions are met), and withdrawals after retirement are taxed as ordinary income.

How Large Is the 401(k) Market? What Impact on Crypto?

The 401(k) plan is the primary employer-sponsored retirement savings plan in the United States. According to a report released by the Investment Company Institute (ICI) in June this year, as of March 31, 2025, total U.S. retirement assets amounted to \(43.4 trillion (accounting for 34% of total U.S. household financial assets), of which individual retirement account (IRA) assets totaled \)16.8 trillion. Americans held \(12.2 trillion in all employer-sponsored defined contribution (DC) retirement plans, with 401(k) plans holding \)8.7 trillion.

Within 401(k) plans, as of the end of March, mutual funds managed \(5.3 trillion in 401(k) plan assets, accounting for 61% of total 401(k) plan assets. Equity funds were the most common type of fund in 401(k) plans, holding \)3.2 trillion (36.7%), followed by hybrid funds, holding $1.4 trillion.

It is currently unknown whether the new executive order will restrict the proportion, type, or specific currencies of cryptocurrency investments. However, once the policy is implemented, if just 1% of the \(8.7 trillion in 401(k) funds flows into the crypto market, it would bring \)87 billion in inflows. If all of this were used to purchase Bitcoin, it would generate demand for approximately 748,000 BTC, and if all were for Ethereum, the demand would be around 22.6 million ETH.

Driven by Both Politics and Capital

This move is a continuation and upgrade of Trump's economic policy. According to Bloomberg, during Trump's first term, the Department of Labor introduced a similar policy allowing private equity in retirement plans, which was later revoked by the Biden administration. Now, Trump is restarting and expanding the scope, attempting to clear obstacles through executive orders and collaboration among multiple regulatory agencies.

Trump's move is not purely an economic decision but also aimed at continuing to gain support from Wall Street. Private equity and hedge funds have long been important financial backers of the Republican Party. Relaxing 401(k) investment restrictions means these institutions will receive long-term and stable capital inflows. Additionally, Trump has recently made frequent statements in support of cryptocurrencies, proposing the establishment of a Strategic Bitcoin Reserve and a Digital Asset Stockpile. This policy directly responds to the core demand of the crypto community—for mainstream financial systems to embrace digital assets.

Opening the "Pandora's Box" of Retirement Funds

The core of this executive order is to break the investment boundaries of traditional retirement accounts. Under ERISA, U.S. 401(k) plans have long been dominated by traditional assets such as stocks and bonds, with alternative assets excluded due to their poor liquidity, complex valuation, and other characteristics.

Supporters view this as a "democratization" process of capital markets, believing it will allow working-class individuals to share in the dividends of economic growth, inject long-term stable funds into the alternative asset industry, and provide an opportunity for emerging assets like cryptocurrencies to gain mainstream acceptance.

However, for the working class, this executive order is both an opportunity to "break investment barriers" and a challenge of "risk spillover."

The essential attribute of retirement accounts is to preserve and increase value, which fundamentally conflicts with the high risk of alternative assets. These characteristics naturally contradict the liquidity needs and risk tolerance of retirement funds. Most working-class individuals lack financial expertise and struggle to identify the true risks of assets, potentially relying on "packaged products" recommended by employers or financial institutions. Driven by interests, institutions may tend to exaggerate returns and downplay risks, leading working-class individuals to passively bear excessive risks due to information asymmetry.

U.S. Crypto Policy Package

The Trump administration has recently released a series of friendly signals, including appointing the first White House Director of AI and Cryptocurrencies, designating cryptocurrencies as a national priority, establishing a Strategic Bitcoin Reserve, holding a "Crypto Week," signing the stablecoin bill "GENIUS Act," and releasing the report "Strengthening U.S. Leadership in Digital Financial Technologies," forming a package of policies.

However, projects or companies led by members of his family, such as World Liberty Financial (WLFI) and American Bitcoin, as well as Trump's own social media platform Truth Social, which plans to launch utility tokens, have cast a shadow of potential conflicts of interest over this policy change.

It is worth noting that several U.S. states have previously proposed draft crypto reserve bills, planning to authorize investment of a portion of retirement funds, retirement systems, or public funds including retirement funds in Bitcoin. Most states limited this investment ratio to 10%, but most bills were rejected or stalled due to adjournments.

The White House Presidential Working Group on Digital Asset Markets also discussed state-level cryptocurrency regulation in its late July report "Strengthening U.S. Leadership in Digital Financial Technologies." Financial service agencies in some states have applied state-level money transmission laws to digital asset custodians and trading platforms, requiring intermediaries to register as money transmitters with the agency to serve clients in those states. Some states have excluded digital asset transactions from money transmission laws, allowing companies specializing in digital asset transactions to operate without licensing requirements in those states. Other states have established specialized regulatory regimes for digital assets. The report also noted in discussing the division of responsibilities among regulatory agencies that federal law should take precedence over state laws, unifying the applicability of regulations related to securities and commodities.

Conclusion

As 401 (k) accounts evolve from simple stock and bond portfolios to complex products including private equity and cryptocurrencies, financial literacy will become a key variable determining investment success or failure. Whether the regulatory system can establish effective firewalls to prevent interest and systemic risks will be the ultimate test of the governance capabilities of U.S. capital markets.

In the face of the huge $12.5 trillion pie, all participants are waiting for the final outcome of this capital game.