Donald Trump has signed an executive order aimed at expanding investment options within US 401(k) retirement plans to include cryptocurrencies, private equity, and other alternative assets.

Currently, approximately 90 million Americans participate in 401(k) plans, collectively holding between $9 trillion and $12 trillion in assets. The inclusion of alternative investments could open a substantial new source of capital for sectors like private equity and cryptocurrency, which have historically faced regulatory and market barriers to retail participation.

The order instructs the Department of Labor and the Securities and Exchange Commission to review and update regulations under the Employee Retirement Income Security Act (ERISA). This legislation governs the standards and fiduciary responsibilities for retirement plans and has traditionally limited the types of assets available to plan participants, largely restricting options to publicly traded securities.

Private equity managers may benefit from access to long-term, stable capital inflows, while cryptocurrency firms could see increased institutional investment through these retirement vehicles. Real estate investment trusts and other real assets might also receive greater allocations, potentially broadening diversification opportunities for savers.

Yet experts have highlighted concerns regarding the volatility and illiquidity of these alternative assets. Additionally, the complexity and higher fees associated with private equity and crypto investments raise questions about the suitability of these options for all retirement savers. Fiduciaries managing 401(k) plans will face heightened responsibilities to ensure compliance and protect investors.