Trump Signs Executive Order Expanding 401(k) Investment Options to Include Cryptocurrency and Alternative Assets
President Donald Trump signed an executive order on August 7, 2025, aimed at broadening investment choices for 401(k) retirement plans by allowing exposure to alternative assets such as cryptocurrency, private equity, and real estate. The initiative, titled Democratizing Access for 401(k) Investors, seeks to modernize retirement investing by enhancing access to potentially higher-return and diversified asset classes traditionally unavailable in most defined contribution plans.
The executive order directs the U.S. Department of Labor (DOL) to revisit existing guidance on fiduciary responsibilities under the Employee Retirement Income Security Act of 1974 (ERISA) for 401(k) plan administrators. Specifically, the DOL is tasked with clarifying how plan fiduciaries should approach alternative asset investments, establishing potential safe harbor provisions to limit fiduciary litigation risks, and issuing updated rules within 180 days.
In addition to the DOL’s role, the executive order mandates collaboration with the U.S. Treasury Department and the Securities and Exchange Commission (SEC). The SEC is instructed to amend regulations to facilitate participant-directed access to alternative assets within retirement accounts, including revising investor qualification requirements. This interagency cooperation aims to ensure an efficient and legally sound framework for incorporating digital assets and private investments into retirement savings plans.
Expanding Investment Opportunities
The Trump administration highlights that while public pensions and defined-benefit plans commonly invest in alternative assets — which can offer competitive returns and portfolio diversification — more than 90 million Americans participating in employer-sponsored defined-contribution plans like 401(k)s currently lack such opportunities. The executive order states the policy objective thus: to provide all Americans preparing for retirement access to alternative asset investment options when deemed appropriate by plan fiduciaries to improve net risk-adjusted returns.
Alternative assets cited include cryptocurrency, such as Bitcoin and Ethereum, private equity, private credit, and real estate, representing investment opportunities beyond traditional stocks and bonds. The policy rationale notes these assets can serve as an important hedge and source of growth given their distinct performance cycles relative to conventional investments.
Implementation Challenges and Fiduciary Considerations
While the order sets an ambitious policy direction, experts note several important considerations. Alternative assets often involve unique risks including liquidity constraints, valuation complexities, and regulatory uncertainties. Plan sponsors and fiduciaries must carefully evaluate these factors and possess adequate expertise before including such investments within retirement plans.
Moreover, administrative challenges arise when managing illiquid assets in daily-liquid retirement accounts, necessitating new operational strategies. The executive order’s proposed safe harbor guidance is expected to provide fiduciaries greater legal clarity, reducing concerns over potential lawsuits related to offering alternative investments.
Market and Regulatory Impact
Industry analysts view the executive order as a significant step towards modernizing retirement savings frameworks, potentially expanding the market for cryptocurrency and private fund managers seeking to reach retirement plan participants. The regulatory updates will be closely watched for how they balance investor protection with increased investment freedom.
The DOL and SEC are scheduled to propose and finalize rules in the upcoming months, setting the stage for a transformative reshaping of 401(k) offerings. Participant education and responsible plan design will be critical to realizing the benefits of alternative asset inclusion while managing associated risks.
This executive order reflects ongoing efforts by the government to provide American workers with diversified tools for retirement security in a changing financial landscape.