Cryptocurrency assets are being considered for inclusion in the most important wealth management systems in the United States.

Written by: Hao Yicheng

Summary: A $12 trillion market reconstruction.

"However, we must be clear-headed about the fact that this is merely opening a door; funds will not flow in all at once. In the short term, its effect on market sentiment is greater than the actual inflow of funds. In the long term, its true value lies in the regulatory signals it releases: cryptocurrency assets are being considered for inclusion in the most important wealth management systems in the United States."

On August 7, 2025, U.S. President Donald Trump signed an executive order titled "Democratizing Access to Alternative Assets for 401(k) Investors," aimed at allowing all Americans participating in employer retirement plans to enjoy alternative asset investment opportunities similar to those of institutional investors, including private equity, real estate, commodities, infrastructure projects, and digital assets (cryptocurrencies). This initiative involves retirement funds totaling up to $12.5 trillion and could have a profound impact on markets such as cryptocurrency, private equity, and real estate.

I. What is a 401(k)

A 401(k) is a type of employer-sponsored retirement savings plan in the United States, named after Section 401(k) of the Internal Revenue Code. Its core mechanism is: provided by employers, employees voluntarily participate, and tax incentives encourage retirement savings.

1. Basic Mechanism

• Employer Provided: Companies set up 401(k) accounts for employees.

• Employee Voluntary Contributions: A certain percentage (e.g., 5%) is deducted from wages and deposited into the account.

• Tax Incentives:

• Traditional 401(k): Contributions are made pre-tax, and taxes are due upon withdrawal in retirement.

• Roth 401(k): Contributions are made after tax, and withdrawals in retirement are tax-free.

• Employer Matching: Many companies will match a certain percentage of the amount employees contribute (e.g., if an employee contributes 5%, the company matches 3%), which is one of the core attractions of the plan.

1. Investment Options

• Self-Selection: Account holders decide how to invest the funds in their 401(k) accounts from a list of options provided by the plan sponsor (usually including various funds, ETFs, bonds, etc.).

• Tax-Deferred Growth: Investment earnings do not incur taxes before retirement, allowing for compound growth.

1. Withdrawal Restrictions

• Generally, withdrawals can only be made freely after reaching age 59.5. Early withdrawals are subject to taxes and may incur a 10% penalty.

1. Size and Importance

• As of 2024, the total asset size of 401(k) plans in the U.S. is between $8 trillion and $12 trillion, making it the most important retirement savings tool for Americans. Its massive capital size means that even minor changes in investment policy can trigger significant market waves.

II. Core Content of the Executive Order

1. Policy Goals

• To "unlock" investment opportunities in alternative assets for ordinary Americans, narrowing the gap between them and institutional investors in terms of investment channels and potential returns.

• To encourage employers and plan sponsors to include more diverse investment options in 401(k) plans.

1. Types of Assets Involved

• Private equity and private credit

• Real estate and infrastructure

• Commodities

• Actively managed digital asset investment tools (e.g., cryptocurrency funds, crypto ETFs, etc.)

1. Regulatory Arrangements

• Requires the Department of Labor (DOL) to provide "safe harbor" guidance under the Employee Retirement Income Security Act (ERISA) for plan sponsors (employers), clarifying their fiduciary responsibilities to reduce litigation risks associated with offering alternative asset options.

• Requires the U.S. Securities and Exchange Commission (SEC), the Treasury Department, and other agencies to assess and adjust the "accredited investor" thresholds to open compliant investment channels for ordinary retirement account investors.

• Encourages the market to develop investment products suitable for retirement accounts, such as target date funds and collective investment trusts (CITs), to balance the risks and liquidity of alternative assets.

III. Impact on Cryptocurrency

Analyzing from the perspectives of capital, compliance, and market sentiment:

1. Capital: Opening the Imagination Space for Long-Term Funds, but the Inflow Process is Slow

• Theoretical Capital Pool: The total size of U.S. 401(k) and other defined contribution retirement plans is approximately $12.5 trillion. Theoretically, even if only 1% of assets are allocated to the cryptocurrency sector, it could bring in up to $125 billion in incremental funds.

• Inflow Depends on Multiple Choices: It must be clear that funds will not flow in automatically. The actual scale depends on whether employers are willing to provide, whether plan managers launch products, and whether employees actively choose to allocate. This is a long process of multi-party negotiation.

• Long-Term Holding Attributes: 401(k) funds have strong long-term and stable characteristics, and funds entering the cryptocurrency market are likely to become "patient capital," helping to reduce overall market selling pressure and volatility.

• Significant Event: BlackRock has announced plans to launch the first cryptocurrency-related investment products for 401(k) plans in 2026, which could serve as a catalyst for the large-scale entry of cryptocurrency assets into U.S. retirement accounts.

1. Compliance: Obtaining Institutionalized "Access Permits"

• The executive order is the first to explicitly mention "digital assets" in the context of long-term retirement investment policy at the federal level, providing strong institutional backing for cryptocurrencies as a legitimate, allocatable asset class.

• This move will greatly promote the compliance process for financial products related to cryptocurrency assets, clearing obstacles for the SEC to approve more crypto ETFs or funds in the future.

1. Market Sentiment: Short-Term Boost and Long-Term Confidence Foundation

• In the short term, this news will become an important catalyst for market sentiment, potentially triggering a wave of speculation around "compliance" and "institutional capital entry."

• In the long term, institutional acceptance will help enhance the overall market's trust, attracting more traditional investors' attention and entry, and promoting the improvement of related infrastructure.

IV. Opportunities and Challenges

1. Opportunities

• Huge Potential Capital Inflows: Could reshape the capital structure of cryptocurrency assets, introducing more long-term, stable "patient capital."

• Promoting Deep Integration with Traditional Finance: Moving cryptocurrency assets from "alternative investments" to a key step toward "mainstream asset allocation."

• Fostering Compliance Product Innovation: Creating vast market space for asset management companies, custodians, and fintech companies.

1. Challenges

• Complexity of Regulation and Law: The legal effect of the executive order is limited and easily overturned, mainly serving a guiding role. True institutionalization requires Congress to amend fundamental laws like ERISA. Until then, policy uncertainty remains.

• Strong Resistance from Fiduciary Responsibilities: Employers, as fiduciaries of 401(k) plans, are very sensitive to introducing high-volatility assets. To avoid legal litigation and management costs, they will be the "final gatekeepers" for the entry of cryptocurrency options into 401(k) plans, and their acceptance process may be very slow.

• Investor Behavioral Inertia and Educational Gaps: Most 401(k) participants are not professional investors and tend to choose default low-risk investment portfolios (like target date funds) with little change. Encouraging them to actively choose high-risk cryptocurrency assets requires large-scale and effective investor education.

• Limitations of the Products Themselves: Cryptocurrency assets generally face issues such as high volatility, complex valuations, and high transaction costs. Designing products that can reflect market returns while meeting retirement accounts' requirements for risk control and low costs is a core challenge for asset management companies.

V. Conclusion

From New Hampshire and Texas promoting Bitcoin reserve bills to this federal-level executive order, the U.S. is gradually paving the way for cryptocurrency assets to integrate into the mainstream financial system. The executive order signed by Trump is undoubtedly a milestone event for the institutionalization and mainstreaming of cryptocurrencies.

However, we must be clear-headed about the fact that this is merely opening a door; funds will not flow in all at once. In the short term, its effect on market sentiment is greater than the actual inflow of funds. In the long term, its true value lies in the regulatory signals it releases: cryptocurrency assets are being considered for inclusion in the most important wealth management systems in the United States.

In the future, the actual scale of capital inflows will depend on the implementation of regulatory details, the richness of compliant products, employers' willingness to accept, and ultimately the autonomous choices of every ordinary investor. This road remains long, but the direction has become unprecedentedly clear.

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