Nairobi, Kenya – August 7, 2025 | By Street.co.ke Staff
In a groundbreaking move for the U.S. financial landscape, President Donald Trump signed an executive order on Thursday, August 7, 2025, that paves the way for cryptocurrencies, private equity, real estate, and other alternative assets to be included in 401(k) retirement plans. This directive, which targets the approximately $12.5 trillion held in these employer-sponsored retirement accounts, marks a significant shift in how Americans can diversify their retirement savings.
The executive order instructs the U.S. Department of Labor to reassess guidance under the Employee Retirement Income Security Act of 1974 (ERISA), which governs most retirement plans. It also directs the Securities and Exchange Commission (SEC) to facilitate access to alternative assets, potentially unlocking a massive new funding pool for digital assets like Bitcoin and Ethereum. The White House emphasized that the move aims to give American workers more investment options for a “stronger and more financially secure retirement.”
A New Era for Retirement Savings
The order builds on recent momentum in Washington to integrate digital assets into mainstream finance. In May 2025, the Labor Department reversed Biden-era guidance that urged fiduciaries to exercise “extreme caution” with cryptocurrencies in 401(k) plans, signaling a more crypto-friendly regulatory stance. This policy shift could open up the $9 trillion 401(k) market to crypto investments, a development hailed as a “holy grail” for the crypto industry by some analysts.
Major asset managers like BlackRock, KKR, and Apollo Global Management are poised to benefit, with some already partnering with retirement plan providers like Vanguard and Empower to offer alternative asset products. For instance, BlackRock plans to launch a retirement fund including private equity and private credit assets in 2026.
Opportunities and Risks
Proponents argue that including cryptocurrencies in 401(k) plans offers diversification and the potential for higher returns, especially for younger savers who can tolerate longer-term investments. “Adding diversifying asset classes to a defined contribution portfolio can generate four or more years of additional retirement income,” said Josh Cohen, managing director at PGIM DC Solutions.
However, critics, including Democratic Senator Elizabeth Warren, warn of significant risks. Private assets and cryptocurrencies often involve higher fees, lower liquidity, and less transparency compared to traditional stocks and bonds. Warren has raised concerns about weak investor protections and the potential for significant losses, particularly for those unfamiliar with crypto’s volatility. “The average American couldn’t explain blockchain if their pension depended on it, which it literally might,” said finance expert Michael Ryan.
Market Impact and Future Outlook
The crypto market reacted swiftly to the news, with Bitcoin climbing 1% to $116,000 and Ethereum surging nearly 4% to a one-week high on August 7, 2025. Crypto-related stocks like Coinbase and Galaxy Digital also saw gains. However, widespread adoption may take time, as plan sponsors face fiduciary responsibilities under ERISA to ensure prudent investments. Analysts suggest that concerns over litigation risks, high fees, and the complexity of alternative assets could slow implementation.
The executive order also aligns with Trump’s broader pro-crypto stance, including his support for bills like the GENIUS Act for stablecoin regulation and the reversal of restrictive policies from the Biden administration. As regulators work to clarify fiduciary guidelines within the next six months, the move could reshape the retirement savings landscape, offering both unprecedented opportunities and new risks for millions of American workers.
Stay tuned to Street.co.ke for updates on how this policy shift impacts global financial markets and what it means for investors in Kenya and beyond.