US President Donald Trump has signed an executive order allowing Americans to include alternative assets such as private equity, cryptocurrencies, and real estate in their 401(k) retirement savings plans.
The order instructs the US Secretary of Labor to review fiduciary guidelines regarding private market investments in 401(k) and other defined contribution plans. It states: “My Administration will relieve the regulatory burdens and litigation risk that impede American workers’ retirement accounts from achieving the competitive returns and asset diversification necessary to secure a dignified, comfortable retirement.”
This move is viewed as beneficial for private asset managers who have advocated for increased adoption of alternative assets in these retirement plans. Following the announcement, Bitcoin’s price surged by about two percent, as the sector may gain access to a substantial pool of multi-trillion-dollar investments.
However, some experts caution that this shift could jeopardize Americans’ savings due to the inherent volatility of cryptocurrencies. Anil Khurana, executive director of Georgetown University’s Baratta Center for Global Business, noted, “Opening up the $9 trillion 401(k) industry to alternative assets overall is reasonable, but if these assets and sectors are highly speculative and underregulated, it could be a big mistake.”