Trump opens the door for private equity and crypto as 401(k) retirement
plan options
[August 08, 2025] By
KEN SWEET
NEW YORK (AP) — Millions of Americans saving for retirement through
401(k) accounts could have the option of putting their money in
higher-risk private equity and cryptocurrency investments, according to
an executive order signed Thursday by President Donald Trump that could
give those financial players long-sought access to a pool of funds worth
trillions.
There is no immediate change in how people invest part of their work
earnings. Federal agencies would need to rewrite rules and regulations
to allow the expanded choices, and that would take months or more to
complete. But once done, employers could offer a broader array of mutual
funds and investments to workers, according to the White House. New
plans could invest in alternative assets, particularly private equity,
cryptocurrencies and real estate.
The Republican president's order directs the Labor Department and other
agencies to redefine what would be considered a qualified asset under
401(k) retirement rules.
Americans' retirement plans are governed by a law known as the Employee
Retirement Income Security Act of 1974, better known as ERISA. Employers
are required by law to offer retirement options that are in the best
interest of their employees, not Wall Street. Most retirement plans for
Americans are made up of stock and bond investments, and to a much
lesser extent, cash and heavily traded commodities such as gold.
Trump's move rewards both the $5 trillion private equity industry, which
for decades has wanted to compete for a role in retirement plans, and
the cryptocurrency industry, whose executives strongly supported Trump’s
2024 campaign as they aimed for more mainstream acceptance among
Americans.

The price of bitcoin was up 2% on Thursday to $116,542 and has nearly
doubled since Trump was elected.
Under Democratic President Joe Biden, federal regulators were to treat
cryptocurrency investments with “extreme care” because of the extreme
volatility of crypto. It is not uncommon for bitcoin, ethereum and other
big cryptocurrencies to move up or down 10% in a single day, whereas a
2% or 3% single-day move in the stock market would be considered
historic.
For cryptocurrency companies, which donated millions to Trump’s campaign
as well as his inauguration, one goal was to get their industry
qualified under ERISA. Coinbase, one of the largest crypto companies in
the United States, was also a major donor toward Trump’s military parade
in Washington this summer. Under Trump, the Securities and Exchange
Commission dropped its lawsuit against Coinbase, where the Biden
administration said crypto should be treated as a security.
Crypto is particularly popular among young Americans. While volatile,
bitcoin has generally moved upward since it was created by an anonymous
programmer nearly 20 years ago.
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President Donald Trump speaks with reporters before boarding Air
Force One at Lehigh Valley International Airport, Sunday, Aug. 3,
2025, in Allentown, Pa. (AP Photo/Julia Demaree Nikhinson)
 “It was inevitable that bitcoin
would make its way into American 401(k)'s,” said Cory Klippsten, the
CEO of Swan Bitcoin. “As fiduciaries realize bitcoin’s risk-adjusted
upside over the long term, we’ll see growing allocations, especially
from younger, tech-savvy workers who want hard money, not melting
ice cubes.”
Private equity firms rely heavily on high-net-worth individuals and
state and private pension plans, which have extremely long
investment timelines. But having access to Americans' retirement
assets would open up a deep pool of cash.
Blackstone CEO Steve Schwarzman has told investors going back to at
least 2017 that it was a “dream” of his and the industry to be able
to draw upon these retirement assets. Previous administrations,
Republican and Democrat, have agreed that private equity
investments, which can be riskier, more expensive and less liquid
than traditional stock and bond market mutual funds, should not be
included in 401(k) plans.
The average historic annual return on private equity assets going
back to 1990 is roughly 13%, net of fees, according to Cambridge
Associates. The S&P 500 index has had an approximate annual return,
including dividends, of roughly 10.6% in the same period of time.
However, private equity assets tend to be locked up for years,
because the companies underlying the assets have to be sold on the
private market, making them highly illiquid compared to stocks,
which can be sold in a day.
“We look forward to working with the Trump Administration on a
thoughtful framework that expands access to alternatives for
retirement savers, offering Americans more diversification and
investment options with appropriate investor guardrails,” said Bryan
Corbett, the president and CEO of the Managed Funds Association,
which is the trade group for the private equity industry.
Even after the regulations are written, it will take time for major
retirement plan companies, such as Fidelity, Vanguard, T. Rowe
Price, and others, to develop appropriate funds for employers to
use. Employers are unlikely to revise their retirement plan options
quickly, so it may take several years before crypto and private
equity investments become mainstream in an individual’s retirement
plan.
“While Vanguard has not committed to launching a product for defined
contribution plans, Vanguard is dedicated to educating retirement
investors to ensure a clear understanding of the opportunities and
risks of investing in private assets,” the company said in a
statement.
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