Trump makes a big move, $9 trillion in pension funds are about to enter the crypto market?

Overnight, the Financial Times broke the news: US President Trump is preparing to sign an executive order allowing retirement plans such as 401(k) to invest in "alternative assets" such as cryptocurrencies, gold and private equity.

The order will require regulators to review existing retirement investment restrictions, clearing the way for digital assets to enter the $8.7 trillion U.S. retirement market, according to three people familiar with the matter.

This trend was not without warning. On May 28, the U.S. Department of Labor revoked the Biden-era guidance document on "extreme caution in treating crypto assets," saying it was "regulatory overreach." Earlier in 2022, Republican Congressman Peter Meyer proposed the Retirement Savings Modernization Act, attempting to include digital assets in the 1974 Employee Retirement Income Security Act (ERISA) framework. Although it was not passed, it laid the groundwork for today's policy shift.

Trump’s “digital asset” ambitions

The core intention of this executive order is to break the 401(k) plan's long-standing focus on traditional stocks and bonds and give it broader asset allocation flexibility.

The order would explicitly direct Washington regulators to delve into and begin removing existing barriers that prevent alternative assets, particularly digital assets, precious metals, and funds focused on corporate mergers and acquisitions, private lending and infrastructure deals, from being included in professionally managed 401(k) funds.

The White House cautiously stated in a statement to the Financial Times: "President Trump is committed to restoring prosperity for ordinary Americans and securing their economic future. But any decision should only be considered official policy after it is formally announced by the President himself." However, these remarks did not conceal the Trump administration's strong signal to promote the mainstreaming of cryptocurrencies.

In fact, this move is a continuation of Trump's series of pro-crypto policies. From his campaign promise to free digital currencies from what he called "overly harsh regulation", to his family business, Trump Media & Technology Group, spending more than $2 billion to buy digital currencies such as Bitcoin, and even launching its own stablecoins and other digital tokens, Trump himself has become a heavyweight player in the field of digital assets, with his personal disclosed crypto asset holdings exceeding $51 million.

His government has also taken action. In May, the Department of Labor revoked a Biden-era policy that discouraged 401(k) plan managers from offering cryptocurrency investment options, paving the way for this executive order.

Interpretation: The deeper significance of opening up the US pension market

To understand the potential impact of this policy, we need to look at the structure and size of the U.S. pension market. As one of the largest pension systems in the world, the U.S. pension market has a total size of $9 trillion.

Specifically, according to public data, as of March 31, 2025, the total assets of all employer-led defined contribution (DC) retirement plans have reached 12.2 trillion US dollars. Among them, the most watched 401(k) plan holds 8.7 trillion US dollars.

These huge funds mainly come from tens of millions of American working people. As an employer-sponsored retirement fund, the 401(k) plan is the core of long-term savings for most working families due to its attractiveness such as salary deduction, tax benefits and employer matching contributions.

Traditionally, these huge retirement funds have mainly flowed into publicly traded securities. As of the end of March 2025, $5.3 trillion (61%) of 401(k) plans alone were managed by mutual funds. Among them, stock funds became the most common type with a scale of $3.2 trillion, followed by hybrid funds (including target date funds), which managed $1.4 trillion. It is this asset allocation status quo dominated by stock and bond mutual funds that provides broad space for Trump's promotion of alternative investment "breaking the ice".

IRA (Individual Retirement Account) provides individuals with a more independent retirement savings option. The wealth accumulated by ordinary Americans over time constitutes a huge amount of "long money" that drives the US economic growth and financial market stability.

Compared with China's pension system, the similarity lies in that both seek to build multi-level protection. China's "enterprise/occupational annuity" has similar employer-sponsored attributes to the US 401(k), while "personal pension" is closer to the IRA's individual independent investment model. Therefore, the US's move to open up pension investment has an impact on the general public's wealth allocation concept, which is of reference significance worldwide.

Private equity giants and new opportunities: redistribution of the trillion-dollar pie

Beyond cryptocurrencies, the order is a potential bonanza for the world’s largest private equity groups, such as Blackstone, Apollo and BlackRock, which have pinned much of their future growth hopes on managing the money of ordinary retirement savers.

The private equity group predicts that if it successfully enters the 401(k) retirement plan market, it could attract hundreds of billions of dollars in new assets to the industry.

To this end, they have been preparing for the rainy day and actively establishing partnerships with large asset management companies: Blackstone has teamed up with Vanguard, and companies such as Apollo and Partners Group are also providing investment services to Empower, a large 401(k) plan sponsor. BlackRock has also begun to cooperate with Great Gray Trust, a third-party administrator of retirement savings plans.

While the federal policy is being formulated, some state governments have already piloted it. Bitpush previously reported that North Carolina legislators had proposed a bill to allow some retirement funds to allocate up to 5% of their balances to cryptocurrencies. Retirement systems in Michigan and Wisconsin have also actually invested in spot Bitcoin and Ethereum ETFs. These local practices provide a reference for federal policies.

Headwinds remain

In terms of legislation, the U.S. House of Representatives passed three important cryptocurrency-related bills on Thursday local time: the CLARITY Act, the GENIUS Act, and the Anti-CBDC Surveillance State Act. Among them, the CLARITY Act and the Anti-CBDC Surveillance State Act will be sent to the Senate for deliberation. The GENIUS Act is expected to be signed by President Trump on Friday local time and officially become law. This marks that Congress has made substantial progress in promoting cryptocurrency legislation and provides a clearer legal framework for the development of the industry.

However, even if the legislation brings positive news, the market still faces challenges. Putting retirement savings into private equity assets with low liquidity is not without risks. Its inherent high fees, high overall leverage ratio, and low transparency in fund asset valuations are factors that regulators and investors need to carefully consider.

When Trump's executive order meets the $9 trillion pension market, this experiment may redefine the meaning of "pension savings" - will it allow ordinary people to share the benefits of technology in the digital age? Or will it expose pensions to new risks? The answer may depend on how regulators find a balance between innovation and protection.