Crypto Assets officially enter U.S. pension plans, the largest incremental entrance is now open.

Original author: Ding Dong

Reprint: Daisy, Mars Finance

Yesterday, Bloomberg reported that Trump will sign an executive order on Thursday aimed at allowing private equity, real estate, cryptocurrency, and other alternative assets to be included in 401(k) pension plans. As soon as the news broke, it swept away the gloom brought by tariffs, and the crypto market performed strongly. Bitcoin forcefully broke through the pressure level near $115,500, Ethereum once again hit the $4,000 mark, and the altcoin sector was in a frenzy. Is the long-awaited "altcoin season" finally coming?

What is 401(k)? Why is the new policy significant?

401(k) plans are one of the most important 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 an employer-sponsored long-term savings plan, 401(k) traditionally focuses on low-risk, high-liquidity assets such as stocks, bonds, and mutual funds, aimed at providing retirees with stable, long-term returns.

Trump's executive order has directly torn apart this conservative framework— for the first time, it explicitly allows high-risk, high-return alternative assets to enter the 401(k) system, including cryptocurrencies, gold, private equity, and real estate. This means that tens of trillions of dollars in retirement funds may flow into markets previously considered "non-mainstream," reshaping the investment landscape of American pensions. For further reading, see "Fierce Good News: Trump Plans to Open American Retirement Funds to Cryptocurrency, Will Trillions Flow into the Market?".

This is not the first time Trump has attempted to loosen the investment scope of 401(k). As early as 2020, during his administration, the Department of Labor had released signals allowing 401(k) to access private assets, but due to the lack of endorsement from a presidential executive order, combined with the low liquidity and limited transparency of private assets, it ultimately failed to trigger widespread follow-up. This time, however, the new policy personally signed by the president not only has greater force but also has a clearer determination for execution.

In May 2025, the U.S. Department of Labor took the lead in revoking the restrictive guidance on including cryptocurrencies in 401(k) from the Biden era, paving the way for this step. At the same time, the Federal Housing Finance Agency also required Fannie Mae and Freddie Mac to include the cryptocurrencies held by borrowers in the housing mortgage assessment system, indicating that the Trump administration is attempting to integrate crypto assets into the mainstream U.S. economy on multiple levels.

Market calculations suggest that if 401(k) plans to allocate only 2% of its assets to cryptocurrencies, it would imply an influx of approximately $170 billion in new funds—equivalent to two-thirds of the current market capitalization of existing cryptocurrency spot ETFs and listed reserves. Such a volume of funds would be enough to set the entire crypto market ablaze.

However, the implementation of the policy does not take effect immediately. The executive order requires the Department of Labor and the U.S. Securities and Exchange Commission (SEC) to formulate detailed regulatory rules, and to establish a "safe harbor" mechanism for 401(k) plan managers to reduce the legal risks they may face due to offering high-risk assets. The formulation of the regulatory framework may take months or even years, and the investment proportions and specific asset ranges are yet to be clarified. Nevertheless, its symbolic significance and potential impact are enough to ignite the market's imagination.

Provincial-level pilot projects, institutions racing to layout

Before the federal policy is fully implemented, some state governments have already taken the lead in testing it.

North Carolina proposed the "North Carolina Digital Asset Investment Act" (House Bill 92) in March 2025, authorizing the state treasurer to invest up to 5% of the state public retirement fund's assets in digital assets such as Bitcoin. Supporters of the bill, Republican Representative Mike Schietzelt, stated that this "opens up a new asset class" for the financial health of the state. As of May 2025, the bill has passed in the state House and is still under consideration in the Senate.

Wisconsin and Michigan have taken the lead. In May 2024, the Wisconsin Investment Board disclosed that it had purchased approximately $160 million worth of Bitcoin spot ETFs (mainly invested in BlackRock's ETF), accounting for 0.1% of its over $100 billion pension fund. Although it was reduced to $104 million in September, it has set a precedent for state-level pension allocation in cryptocurrencies in the United States. Michigan, on the other hand, disclosed in July 2024 that its pension fund had acquired about $6.5 million in Bitcoin ETFs, included in the retirement investment portfolios of state government employees and teachers.

Arizona is similarly proactive. In February 2025, Republican State Senator Jake Hoffman proposed that the state retirement system consider allocating to a Bitcoin ETF.

Although these investment scales are not considered large, they are seen as a signal for state-level pension "trial runs," providing reference samples for other states.

At the same time, Wall Street institutions are keenly capturing policy trends and accelerating their layout to seize the market opportunity of 401(k). Fidelity, an industry giant managing $5.9 trillion in assets, will launch a cryptocurrency-supported retirement account product in April 2024, allowing investors to invest in Bitcoin and Ethereum spot ETFs through Self-Directed Brokerage (SDB) accounts.

Jon Gray, president of Blackstone, stated that leading institutions in the alternative asset space will be the first to benefit from the new policy regarding 401(k), which is expected to attract hundreds of billions of dollars in capital inflow. Blackstone is collaborating with Morgan Stanley to develop private equity investment tools aimed at 401(k) plans, lowering the entry barriers to attract small and medium-sized investors. Apollo Global Management has partnered with State Street to launch target date funds (TDFs) that include private equity, specifically designed for retirement savings while balancing returns and risk control. BlackRock is also actively developing 401(k) products that support crypto spot ETFs and Real Estate Investment Trusts (REITs). Its digital asset head, Robert Mitchnick, mentioned that they are conducting in-depth research and education with pension fund managers to help them understand crypto asset investments.

The actions of these state-level and institutional players indicate that both local policy experiments and Wall Street's strategic layout are paving the way for the opening of alternative assets in 401(k). Cryptocurrency, as a high-risk, high-reward asset class, is gradually being integrated into the U.S. retirement savings system.

Where is the capital flowing specifically? New opportunities are emerging in the crypto sector.

The $9 trillion asset base of 401(k) has given the crypto market an unprecedented incremental imagination. Even a small percentage of funds flowing in could significantly drive up the prices of mainstream crypto assets like Bitcoin and Ethereum. In particular, crypto spot ETFs have advantages in compliance, custody security, and liquidity, and may become one of the first beneficiaries as a fund carrier.

In the previous funding cycle led by institutions, targets with high liquidity and strong transparency are more likely to be favored. In addition to Bitcoin and Ethereum spot ETFs, projects such as SOL, XRP, LTC, and DOGE also have a high probability of receiving ETF approvals, thereby benefiting from this wave of pension fund inflows.

Market Disputes and Risk Warnings

Despite the market enthusiasm, academia and regulators have expressed strong concerns about the high-risk characteristics of alternative assets.

Professor Jeffrey Hooke of Johns Hopkins University bluntly stated that including private equity and cryptocurrencies in 401(k) is a "bad idea." He pointed out that private equity has poor liquidity, high fees, and long-term returns may not be superior to traditional stock markets; while cryptocurrencies are difficult to rely on as a retirement savings option due to extreme volatility (for example, Bitcoin plummeted over 60% in 2022) and their relatively short history.

Specializing in high-fee litigation, Jerry Schlichter, a partner at the law firm Schlichter Bogard, warns: "The retirement goal for the average person is safety and stability; cryptocurrencies are fraught with unknown risks, and their volatility in the short to medium term is severe, making them unsuitable as core retirement assets."

Democrats also take a cautious stance on the policy. Senators like Elizabeth Warren criticize the regulatory framework of the "Genius Act" as being too lenient, worrying that allowing large corporations to issue private cryptocurrencies could undermine the stability of the financial system. They describe ordinary savers as potentially becoming "guinea pigs for policy experiments," calling for stricter regulations and risk assessments.

Conclusion

Trump's executive order is opening an unprecedented policy door for the cryptocurrency and alternative asset industry. If trillions of dollars of 401(k) funds flow in in batches, it will not only change the direction of capital flow but also enhance the legitimacy and voice of crypto assets within the mainstream financial system.

But opportunities come with risks. The formulation of regulatory details, the popularization of market education, and the setting of investment ratios will determine the actual quality of this transformation. In the coming months, investors need to closely monitor the follow-up actions of the Department of Labor and the SEC, as well as the real landing pace of institutional funds.

For the cryptocurrency market, this may not only be a feast of capital but also a crucial turning point for crypto assets to truly step onto the mainstream financial stage.