A new directive from former President Donald Trump could soon reshape how millions of Americans invest for retirement by allowing 401(k) accounts to include high-risk options like private equity, cryptocurrencies, and real estate. The move, laid out in an executive order signed Thursday, calls for federal agencies to revise current regulations, a process expected to take months.
Though immediate changes are not in effect, the order signals a shift that may ultimately provide retirement savers access to investment products long sought by industries like crypto and private equity. According to the White House, the goal is to expand the portfolio of mutual funds available to employees under employer-sponsored retirement plans.
This policy change instructs the Labor Department and related agencies to reevaluate what qualifies as an acceptable asset under the Employee Retirement Income Security Act of 1974 (ERISA), which currently governs U.S. retirement plans. By law, employers must act in the best financial interest of their workers, a standard historically interpreted to favor stable investments such as stocks, bonds, and certain commodities.
Trump’s directive could be seen as a win for the private equity industry, estimated at $5 trillion, which has lobbied for decades to gain access to retirement funds. It also benefits the cryptocurrency sector, which threw its weight behind Trump’s 2024 campaign in hopes of gaining regulatory acceptance.
At the time of the announcement, Bitcoin was trading at $116,542, up 2%, and had nearly doubled since Trump’s re-election, underscoring the sector’s growing appeal. During President Joe Biden’s term, regulators had urged caution with crypto investments, describing the market’s volatility as a risk to retirement portfolios. It’s not uncommon for cryptocurrencies like Bitcoin and Ethereum to swing 10% in a single day, whereas even a 3% move in the broader stock market is rare.
Crypto executives saw Trump’s return to office as an opportunity to integrate digital currencies into mainstream financial tools. One such executive, Cory Klippsten of Swan Bitcoin, remarked that it was “inevitable that bitcoin would make its way into American 401(k)’s,” especially as more fiduciaries recognize the long-term, risk-adjusted potential of crypto, particularly among younger, tech-savvy investors.
Similarly, private equity leaders see the change as a gateway to new capital. Steve Schwarzman, CEO of Blackstone, has described accessing retirement assets as a longtime “dream” for the industry. Historically, both Republican and Democratic administrations resisted including these investments in 401(k) plans, citing their higher costs, complexity, and limited liquidity compared to publicly traded stocks.
Despite the concerns, private equity has posted strong historical returns. Data from Cambridge Associates indicates an average net return of 13% annually since 1990, outpacing the S&P 500’s approximate 10.6% return over the same period. However, private equity assets are typically locked in for years, making them less accessible to average investors.
Bryan Corbett, president and CEO of the Managed Funds Association, expressed optimism, noting that the group is eager to collaborate with the Trump administration on a “thoughtful framework” that balances access to alternatives with adequate investor protections.
Still, adoption is expected to be gradual. Leading firms like Vanguard and Fidelity would need time to develop suitable products, and employers are unlikely to overhaul their plans immediately. A statement from Vanguard clarified that while they haven’t committed to launching a defined contribution product, they remain focused on educating investors about both the risks and benefits of private asset investments.
As the regulatory landscape shifts, it may take several years before private equity and crypto options become commonplace in American retirement planning, but the groundwork is clearly being laid.
