US President Donald Trump is reportedly set to sign an executive order allowing 401(k) retirement plans to invest in cryptocurrencies and other alternative assets.
Proposed Executive Order by Trump
According to the Financial Times, Trump is planning to sign an executive order that will permit 401(k) pension plans the option to invest in alternative assets, including cryptocurrencies. The order could be signed sometime this week. Under the new directive, pension plans would be able to extend their investment options to assets like digital currencies, metals, and funds focused on infrastructure deals. The order also instructs Washington regulatory agencies to explore how this initiative can be implemented.
Overview of 401(k) Plans
A 401(k) is a retirement savings plan offered by many US employers, allowing employees to set aside a portion of their paycheck for retirement savings before taxes are deducted. Typically, investments within a 401(k) are centered around stock indexes, exchange-traded funds, and bonds. As of September 30, 2024, the 401(k) market held $8.9 trillion in assets.
Global Trends in Cryptocurrency Investments
Internationally, other nations are also beginning to consider the integration of cryptocurrencies into retirement plans. For instance, a UK pension fund has already allocated 3% of its funds to Bitcoin investment. Japan's Government Pension Investment Fund is similarly looking at Bitcoin as a diversification tool.
The signing of the executive order would enable American 401(k) plans to broaden their investment options, potentially leading to increased adoption of cryptocurrencies within traditional financial systems.
