Trump signs order to expand retirement investment options, including crypto

President Donald Trump signed an executive order Aug. 7 that could pave the way for millions of Americans to add cryptocurrency, real estate and private equity to their 401(k) retirement plans.

The order directs the Labor Department and other federal agencies to redefine what qualifies as a retirement asset, potentially broadening the investment options available to workers.

However, the process of rewriting rules and regulations could take months, and experts say it will be years before most employees see new options in their plans.

How the order changes the rules

The executive order calls on federal agencies to update the definition of a qualified retirement asset under the Employee Retirement Income Security Act of 1974, or ERISA. The law requires employers to offer investment options that are in the best interest of employees, not Wall Street.

Currently, most retirement plans consist of stocks, bonds, cash and heavily traded commodities such as gold.

Why experts are cautious

Financial experts warn that while the order may offer more flexibility, assets like cryptocurrency and private equity are volatile, difficult to sell and often come with high fees.

Under President Joe Biden, regulators were advised to treat cryptocurrency with “extreme care” due to market swings.

Political and industry connections

Cryptocurrency companies contributed millions to Trump’s presidential campaign and inauguration, hoping to gain inclusion under ERISA rules. The industry has pushed for retirement plan access as part of broader mainstream acceptance.

Market reaction

Following the announcement, bitcoin rose 2 percent Thursday to $116,542, and has nearly doubled in value since Trump took office.

What happens next?

Even after federal agencies rewrite regulations, retirement plan providers such as Fidelity, Vanguard and T. Rowe Price would need to design new funds.

Employers are unlikely to update their plans immediately, meaning it could be several years before crypto or private equity appears in most 401(k) menus.