Author: Lacie Zhang, Researcher at Bitget Wallet

Introduction: On August 7, 2025, Eastern Time, an executive order from the White House may become another historic turning point in the crypto market, following the Bitcoin spot ETF. U.S. President Trump signed an executive order directing the Department of Labor to revise rules to formally include alternative assets such as cryptocurrencies, real estate, and private equity in the investment options of 401(k) pension plans.

This not only concerns the $8.7 trillion of American "national livelihood funds," but it may also pave the way for a second large-scale entry of institutional capital, creating an unprecedented compliance highway. When the retirement accounts of tens of millions of Americans are directly linked to crypto assets, a profound transformation is brewing.

Let’s explore this transformation together with the Bitget Wallet Research Institute.

I. The $8.7 Trillion "Golden Key": Why is 401(k) a Key Variable?

To understand the power of this transformation, we first need to grasp the "C-position" role of 401(k) in the U.S. pension system. The U.S. pension system is like a tripod, supporting the retirement lives of its citizens:

The existing three-pillar pension system in the U.S. — Government + Employer + Individual

| Project | Government Social Security | Employer-Sponsored Plans (401(k) etc.) | Individual Retirement Accounts (IRA etc.) | |----------------------------------|---------------------------------|---------------------------------------------|------------------------------------------------| | Nature | Public pension insurance operated by the government | Retirement savings plans provided by employers | Retirement investment accounts opened by individuals | | Participation Method | Mandatory, eligible employees must participate | Voluntary | Voluntary | | Funding Source | Payroll taxes (paid by employees and employers) | Employee pre-tax contributions, employer matching | Personal funds deposited | | Fund Management | Unified management by the government | Managed by individuals | Managed by individuals | | Investment Choices | No personal choice | Limited investment options provided by employers | Individuals can freely choose investments | | Early Withdrawal | Not allowed | Allowed, but subject to a 10% penalty | Allowed, but subject to a 10% penalty | | Amount | $8.9 trillion | $12.2 trillion | $16.8 trillion |

Source: Fintax, not considering the corporate pension reserves of insurance companies and private sector fixed-income guarantees.

1. First Pillar: Government-led Social Security, similar to China's basic pension insurance, is mandatory, but individuals have no investment choice.
2. Second Pillar: Employer-initiated retirement plans, with 401(k) being the absolute mainstay. It is funded jointly by employees and employers, and while the investment options are preset by employers, it has a wide coverage and stable cash flow, making it a core tool for the American middle class to accumulate retirement wealth.
3. Third Pillar: Individual Retirement Accounts (IRA), which are completely voluntarily opened and managed by individuals, granting them significant investment freedom, resembling an "open professional market" where participants must actively research and make decisions.

According to data from the Investment Company Institute (ICI) in the first quarter of 2025, the total size of the U.S. pension market reached $43.4 trillion. In this vast ocean of funds, the portion that individuals can make investment decisions on is about $29 trillion. Among this $29 trillion, the 401(k) plan alone accounts for $8.7 trillion, making up 30%. This massive amount of money is the "gold mine" targeted by this new policy.

401(k) Account Balance by Age Group (as of 2024)

| Age Group | Average 401(k) Balance | Median 401(k) Balance | |------------------|------------------------|-----------------------| | Under 25 | $6,899 | $1,948 | | 25 to 34 | $42,640 | $16,255 | | 35 to 44 | $103,552 | $39,958 | | 45 to 54 | $188,643 | $67,796 | | 55 to 64 | $271,320 | $95,642 | | 65 and older | $299,442 | $95,425 |

Source: Vanguard Group "How America Saves 2024"

Vanguard's 2024 report depicts the national profile of 401(k): the average balance of all participants has reached $148,153. Notably, as age increases, account balances rise exponentially, with the average balance for those aged 65 and older approaching $300,000. This means that 401(k) not only has a large amount of funds, but its holders also include the most purchasing power-rich middle-aged and elderly groups in American society.

Previously, this vast sum was strictly limited to traditional stocks, bonds, and mutual funds. Now, the Trump administration intends to equip it with a "golden key" that can unlock the door to the crypto world.

II. The Triple Waves of the Future: How Will the New Policy Reshape the Crypto Market Landscape?

Incorporating cryptocurrencies into 401(k) investment categories will have impacts that go beyond simple capital inflow; it represents a structural transformation that links users, institutions, and regulators.

1. First Wave: "National-Level" Icebreaking of User Mindsets

One of the biggest challenges for the crypto industry has always been "breaking out" — how to get the mainstream public, especially those with substantial wealth but conservative mindsets like middle-aged and elderly investors, to accept and allocate crypto assets. This reform can be seen as a top-down "national-level" market education.

Imagine when a 55-year-old American corporate employee sees "crypto asset allocation fund" listed alongside "S&P 500 index fund" and "U.S. Treasury fund" on the 401(k) investment menu provided by Fidelity or Vanguard; their psychological perception will undergo a revolutionary change. This is no longer a distant and high-risk speculative code on social media, but a compliant retirement investment product approved by the U.S. Department of Labor, packaged by top asset management institutions, and accepted by their employer. The dual endorsement of national sovereign credit and top financial institutions will greatly alleviate ordinary people's doubts and resistance towards crypto assets, completing a user cultivation process with the lowest cost and widest coverage.

2. Second Wave: Continuous Flow of "Living Water" from Institutional Capital

If the approval of Bitcoin spot ETFs opened a door for institutional capital to engage in active investment, then the entry of 401(k) is akin to opening a continuous "automated water pipeline." The capital flow from ETFs largely depends on investors' active decisions and market sentiment, sometimes surging, sometimes calming. In contrast, the capital injection model of 401(k) is fundamentally different: it is directly tied to the vast national payroll system of the U.S. This means that every payday, a portion of millions of paychecks will be automatically allocated to the selected crypto asset investment portfolio, almost without the holders' awareness. This stable and massive incremental capital will provide unprecedented depth and resilience to the market.

This certain prospect will ignite a new round of product "arms race" among Wall Street giants. Institutions like Vanguard and Fidelity will not be satisfied with past singular crypto products but will shift towards more diversified, structured, and risk-controlled "401(k) customized" crypto funds. For example, a potential "basket" index fund that includes Bitcoin, Ethereum, and some blue-chip DeFi tokens, or a "mixed allocation fund" that combines crypto assets with traditional stocks and bonds to smooth out volatility. This not only enriches the channels for capital entry but will also strongly promote the maturity and standardization of the entire crypto asset management industry.

3. Third Wave: "Political Moat" Across Party Lines

However, the most profound step of this new policy may be hidden beneath the clamor of financial markets — it aims to create a "political moat" that can transcend partisan disputes for the turbulent crypto world.

The policy uncertainty brought about by the alternation of the two major parties in the U.S. has always been a "Damocles' sword" hanging over the crypto industry, making any long-term capital hesitant. The oscillation in regulatory attitudes between the Democratic and Republican parties, and even policy differences among leaders of the same party, have made the long-term development of the industry full of variables. The brilliance of the 401(k) new policy lies in the fact that it deeply binds crypto assets with the "livelihood funds" of tens of millions of American voters. This fundamentally changes the nature of the game: crypto assets are no longer an exclusive topic for Wall Street and tech geeks, but have become "national cheese" that every ordinary family cannot ignore.

Imagine the implementation of the new policy: any future government attempting to impose strict crackdowns or even overturn existing crypto policies will face immense political pressure because any attempt to undermine the crypto market could be directly interpreted by voters as "messing with my retirement funds," leading to severe political backlash. This blatant binding of interests elevates the protection of the crypto market from Trump's personal actions or partisan behavior to a "forced choice" for candidates to woo voters and for officials to protect national wealth. Thus, a solid moat has already formed, compelling both parties to seek a more stable consensus on crypto regulation, allowing the entire industry to break free from the fate of severe fluctuations due to party alternation, and truly cementing "crypto-friendly" into America's long-term financial agenda.

III. Vision and Reflection: Opportunities and Challenges on the Path to a Trillion-Dollar Blue Ocean

For such a new policy, we have reason to remain optimistic. Just as the approval of the Bitcoin spot ETF propelled Bitcoin to break the $100,000 mark within a year: the massive development of compliant products will inevitably trigger a revaluation of the underlying assets. Even assuming that only 5% of 401(k) funds (about $400 billion) flow into the crypto market initially, this would still be a substantial amount for the current crypto industry, not to mention the significant multiplier effect it would have on user cultivation and regulatory icebreaking.

Looking ahead, if personal-managed pensions can invest in crypto assets, could the much larger social security funds held by the government also open a door in the future? That would be a reconstruction of the entire social wealth and financial system.

However, at the same time, optimism cannot replace critical thinking; we must remain cautious, as core challenges still exist:

• Will investors buy in? Currently, over 60% of 401(k) assets are still concentrated in traditional mutual funds. Convincing Americans, who have been accustomed to decades of investment models, to allocate their retirement funds to a high-volatility emerging market will require time and market validation.
• How to control risks? The severe cyclical volatility of crypto assets is the nemesis of retirement savings. How the Department of Labor, asset management institutions, and employers will delineate investment ratios and provide risk warnings to protect investors' interests — these details will determine the success or failure of the policy.
• What will the product forms be? The scope of investment determines the breadth of risk — will it stick to Bitcoin and Ethereum, or open up to a broader token market? The product design will determine the depth of risk — how to smooth out volatility to protect investors is a key unresolved issue.

IV. Conclusion

The Trump administration's executive order is less of a final answer and more of a starting gun. It attempts to leverage the $8.7 trillion 401(k) as a fulcrum, aiming to pry open not only the vast U.S. pension system but also the future landscape of global crypto finance. The road ahead is filled with opportunities and unknown reefs and shoals. But regardless, when the most traditional and conservative capital of retirement funds begins to seriously examine the crypto world, a new era's door is slowly being pushed open.

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