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Cryptocurrency Officially Enters US Pension Plans: Unlocking the Largest Incremental Market Entry Point
Intermediate
2025-08-11 | 15m
Bloomberg reported that Trump will sign an executive order Thursday aimed at allowing private equity, real estate, cryptocurrencies, and other alternative assets to be included in 401(k) retirement plans. This news lifted the gloom brought on by tariffs, leading to strong performance in the crypto market. Bitcoin surged past the $115,500 resistance level, while Ethereum once again pushed towards the $4,000 mark, sending the altcoin sector into a frenzy. Is the long-awaited "altcoin season" finally here?
What is a 401(k)? Why is the New Policy Significant?
401(k) plans are among the most critical retirement savings tools in the United States, managing approximately $9 trillion in assets and covering the retirement funds of tens of millions of Americans. As employer-sponsored long-term savings vehicles, 401(k) plans have traditionally focused on low-risk, highly liquid assets such as stocks, bonds, and mutual funds, with the goal of providing retirees with stable, long-term returns.
Trump’s executive order directly breaks this conservative framework, marking the first time high-risk, high-return alternative assets, including cryptocurrencies, gold, private equity, and real estate, have been explicitly permitted in 401(k) systems. This means trillions of dollars in retirement funds could flow into previously "non-mainstream" markets, reshaping the investment landscape of U.S. pension funds.
This is not Trump’s first attempt to loosen 401(k) investment restrictions. In 2020, his Department of Labor signaled openness to allowing 401(k)s to access private assets, but the lack of a presidential executive order, coupled with private assets’ low liquidity and limited transparency, prevented widespread adoption. This time, the policy, personally signed by the president, is more forceful and demonstrates a clearer commitment to implementation.
In May 2025, the U.S. Department of Labor took the lead in revoking the Biden-era restrictive guidance on including cryptocurrencies in 401(k)s, laying the groundwork for this move. Concurrently, the Federal Housing Finance Agency required Fannie Mae and Freddie Mac to include borrowers’ crypto assets in mortgage assessments, reflecting the Trump administration’s efforts to integrate crypto into the mainstream U.S. economy at multiple levels.
Market estimates suggest that even a 2% allocation of 401(k) assets to cryptocurrencies would bring approximately $170 billion in new capital inflows—equivalent to two-thirds of the market capitalization of existing crypto spot ETFs and listed reserves. Such a massive influx could significantly stir the entire crypto market.
However, the policy will not take effect immediately. The executive order mandates the Department of Labor and the Securities and Exchange Commission (SEC) to develop detailed regulatory rules and establish a "safe harbor" mechanism for 401(k) plan administrators, mitigating potential legal risks from offering high-risk assets. Developing this regulatory framework could take months or even years, and details such as investment ratios and specific asset ranges remain to be clarified. Even so, its symbolic significance and potential impact are enough to capture market imagination.
State-Level Pilots and Institutional Participation
Before federal policies are fully implemented, some state governments have already begun testing the waters.
In March 2025, North Carolina introduced the
North Carolina Digital Asset Investment Act (House Bill 92), authorizing the state treasurer to invest up to 5% of the state’s public retirement fund in digital assets like Bitcoin. Republican Representative Mike Schietzelt, the bill’s sponsor, stated it "opens up a new asset class" to support the state’s fiscal health. As of May 2025, the bill had passed the House and was under Senate consideration.
Wisconsin and Michigan are further along. In May 2024, the Wisconsin Investment Commission disclosed it had purchased approximately $160 million in Bitcoin spot ETFs (primarily BlackRock’s ETF), accounting for 0.1% of its over $100 billion pension fund. Though this amount was reduced to $104 million by September, it set a precedent for U.S. state pension funds allocated to crypto. Michigan revealed in July 2024 that its pension fund had purchased roughly $6.5 million in Bitcoin ETFs for inclusion in retirement portfolios of state employees and teachers.
Arizona is also active. In February 2025, Republican State Senator Jake Hoffman proposed that the state retirement system consider allocating to Bitcoin ETFs.
While these investments are small in scale, they signal "testing the waters" for state-level pensions and provide reference samples for other states.
Meanwhile, Wall Street institutions are closely monitoring policy trends and accelerating efforts to seize 401(k) market opportunities. Fidelity Investments, a giant with $5.9 trillion in assets under management, launched a crypto-supported retirement account product in April 2024, allowing investors to access Bitcoin and Ethereum spot ETFs through self-directed brokerage (SDB) accounts.
Blackstone President Jon Gray noted that leading alternative asset institutions will be the first to benefit from the new 401(k) policy, which could attract hundreds of billions in capital inflows. Blackstone is collaborating with Morgan Stanley to develop private equity investment tools for 401(k) plans, lowering entry barriers for small and medium investors. Apollo Global Management has partnered with State Street to launch a target date fund (TDF) incorporating private equity, designed specifically for retirement savings to balance returns and risk managemen. BlackRock is also actively developing 401(k) products supporting crypto spot ETFs and real estate investment trusts (REITs). Robert Mitchnick, BlackRock’s head of digital assets, stated the firm is conducting in-depth research and education with pension fund managers to enhance their understanding of crypto investments.
These state and institutional actions demonstrate that local policy experiments and Wall Street’s strategic planning are paving the way for 401(k) inclusion of alternative assets. Cryptocurrencies, as a high-risk, high-return asset class, are gradually integrating into the U.S. retirement savings system.
Crypto Space is Welcoming New Opportunities
The $9 trillion 401(k) asset base has given the crypto market unprecedented growth potential. Even a small influx of funds could significantly drive up the prices of mainstream crypto assets like Bitcoin and Ethereum. Crypto spot ETFs, in particular, offer advantages in regulatory compliance, custodial security, and liquidity, and are likely to be among the first to benefit.
In this new institutional-led funding cycle, assets with high liquidity and transparency are more likely to be favored. In addition to Bitcoin and Ethereum spot ETFs, projects like SOL, XRP, LTC, and DOGE also have a high probability of receiving ETF approval, thereby benefiting from this wave of pension fund inflows.
Market Disputes and Risk Warnings
Despite market enthusiasm, academics and regulators have voiced strong concerns about the high-risk nature of alternative assets.
Jeffrey Hooke, a professor at Johns Hopkins University, bluntly stated that including private equity and cryptocurrencies in 401(k)s is a "bad idea." He noted that private equity suffers from poor liquidity and high fees, with long-term returns potentially no better than traditional stocks. Meanwhile, cryptocurrencies—due to extreme volatility (e.g., Bitcoin’s over 60% plunge in 2022) and short market history—are not reliable for retirement savings.
Jerry Schlichter, a partner at Schlichter Bogard, a law firm specializing in high-fee 401(k) litigation, warned: "The average person’s retirement goal is security and stability. Cryptocurrencies carry unknown risks and significant short-to-medium-term volatility, making them unsuitable as core retirement assets".
Democrats are also cautious. Senator Elizabeth Warren and others criticized the policy’s regulatory framework as overly lax, expressing concern that allowing large corporations to issue private cryptocurrencies could destabilize the financial system. They described ordinary depositors as potentially becoming "guinea pigs in policy experiments" and called for stricter oversight and risk assessment.
Conclusion
Trump's executive order is opening an unprecedented policy opportunity for the crypto and alternative asset industries. If trillions of dollars in 401(k) funds flow into the system in batches, this will not only shift capital flows but also enhance the legitimacy and influence of crypto assets within the mainstream financial system.
But opportunities come with risks. The development of regulatory details, market education, and the setting of investment ratios will all determine the effectiveness of this transformation. In the coming months, investors will need to closely monitor the subsequent actions of the Department of Labor and the SEC, as well as the actual pace of institutional investment.
For the crypto market, this may not only be a feast of funds, but also a key turning point for crypto assets to truly enter the mainstream financial stage.
CoinCatch Team
Disclaimer:
Digital asset prices carry high market risk and price volatility. You should carefully consider your investment experience, financial situation, investment objectives, and risk tolerance. CoinCatch is not responsible for any losses that may occur. This article should not be considered financial advice.
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