The newest U.S. administration and the SEC have demonstrated their pro-crypto stance lately by unveiling a series of plans, including one that urges the SEC’s commission staff to create a guideline to determine whether a token is a commodity or a security, as well as suggestions for future exemptions and disclosures. In recent days, President Trump put his signature on an executive order named “Democratizing Access to Alternative Assets for 401(k) Investors”, marking one of the most momentous potential modifications in U.S. retirement policy in recent decades.
This shift opens the door to allowing retirement savers to invest in more than just traditional assets, such as mutual funds, bonds, and stocks; individuals can now store value by holding alternative assets. If the initiative becomes widely available, as expected, employees could have new options in their 401(k) accounts, including crypto holdings, private equity funds, and possibly estate-based investment products.
The point is to provide access to financial products that have previously been considered niche and available only to large institutions or wealthy investors. Everyone with an internet connection can open up an account on a crypto exchange when they determine that they’re educated and protected enough to invest in the best cryptocurrency they feel like will reward them – but that’s pretty much all. The most recent developments indicate that this may change in the near future.
What’s happening
Currently, some investment products and opportunities are limited to those with significant net worth and high incomes, individuals commonly referred to as “accredited investors.” But the latest order is changing this old narrative by instructing the SEC, the Treasury Department, and the Department of Labor to relax limitations when it comes to retirement accounts, with the latter being asked to also develop “safe harbor” protections for employers to make offering alternative assets in their businesses’ retirement plans legally safer.
Noteworthy, as of August 2025, the plans available in your 401(k) are the same they’ve been so far. However, it’s useful to keep an eye on the upcoming development stages to better know where the policy is headed, even if we might be months, or even years, away from seeing crypto-based products in accounts yet.
The reasoning
The U.S. retirement savings market is unimaginably huge – according to the Investment Company Institute, there were approximately $12.2TN in employer-based defined-contribution retirement plans by the end of this year’s March, with $8.7TN held in 401(k) accounts alone. With such a massive capital pool at stake, private equity and crypto firms are strategizing to secure even a small share thinking it could generate decent returns for their products.
Trump has expressed his enthusiasm for alternative investments and crypto products, having a crypto token bearing his name on the market as well. Recently, the administration made public plans to create a Strategic Digital Asset Reserve in an attempt to transform the U.S. into a leading crypto hub, after which an Ethereum-based reserve was established. Allowing crypto in retirement accounts aligns with its vision.
Private equity firms promote their strategies on the premise that they can outperform public stocks in the long run – a promise that appeals to investors whose timelines are as long as those of retirement portfolios. They’re simply able to wait for decades to see their investments yield results – generous results.
The potential good parts
This change’s advocates name several advantages for everyday savers, such as the possibility to diversify portfolios beyond the products that have been available to date. Most investors’ 401(k) portfolios are currently composed mainly of public stocks and bonds, but by diversifying into crypto, real estate, and private equity, they can direct their money to a wider range of investments and reduce the risks associated with focusing on one or a few types. For instance, if bonds decline, another category, such as crypto, might offer a cushion against losses if it outperforms, allowing for a more resilient pool of assets.
Another potential benefit that could be drawn is the potential for higher returns. A 2022 study from Cambridge Associates found that U.S. private equity funds generated a mean annual return of 10.48% from 2000 to 2020, compared with roughly 5.91% for the S&P 500 or the 6.69% from the Russell 2000 Index recorded over the same period. While there’s no guarantee for returns, the immense risks that investors were fine with taking show how much appeal volatile investment products have for deep-pocketed investors looking for high rewards.
Lastly, we have the access argument, where a big share of American employees who couldn’t even dream of accessing assets like crypto finally get the opportunity that wealthy investors have had so far. By including alternatives in workplace retirement plans, the government would practically be giving everyday savers the same investment opportunities that only wealthy families, hedge funds, and large institutions have enjoyed, and that’s finally leveling the playing field.
There are considerable risks, too
The potential rewards are justifiably attractive, all the more if you’re a future-oriented, tech enthusiast; but it’s important to give a good thought to the risk before entering such volatile markets. First things first, private equity funds are known for charging acid fees, often going as far as 2% of assets annually, and another spicy percentage that’s taken from profits. Index funds, on the other hand, might not even charge a 0.1%, while 401(k) plans take around 0.26% per year. High fees can reduce returns, especially when gathering over long periods of time.
Then there’s liquidity. Investors who opt for private equity and real estate funds block their money for years as part of the mutual contract, meaning that if you invest yours in them and you ever need cash, you won’t be able to withdraw your money – or you’ll have to pay a penalty to sell the investments. That limitation might be particularly disadvantageous for those nearing retirement or anyone who requires flexibility.
Endnote
The best thing you can do now is to stay informed if you ever plan to invest in crypto, estate, or private equity funds – provided that they’ll pass. Follow the rules’ development, ask questions about any new options available, and ensure any investment you choose is fit for your goals, time horizon, and risk tolerance.
