Bitcoin and Crypto Stocks Surge After Trump's Executive Order on 401(k) Investments

Executive Order Opens Doors for Cryptocurrencies in Retirement Accounts

President Trump has taken a significant step toward reshaping the landscape of retirement investments by signing an executive order that paves the way for alternative assets, including cryptocurrencies and private equity, to be included in the retirement accounts of millions of Americans. This move is expected to have far-reaching implications for both individual investors and the broader financial sector.

The announcement came as a major catalyst for the cryptocurrency market, with several key digital assets experiencing notable gains. On Thursday, before the official release of the executive order, major cryptocurrencies and crypto-related stocks saw a surge in value. By Friday, Bitcoin (BTC-USD) was trading near $117,000, up around 1% from the previous day. Ether (ETH-USD) and XRP (XRP-USD) also showed strong performance, with gains exceeding 5% and 11%, respectively.

In addition to the digital assets, shares of prominent crypto platforms like Coinbase (COIN) and Robinhood (HOOD) rose slightly in premarket trading on Friday. Meanwhile, shares of MicroStrategy (MSTR) remained relatively flat ahead of the market open.

A New Era for Retirement Investments

The executive order, signed by President Trump, directs the Securities and Exchange Commission (SEC) to facilitate the inclusion of alternative assets in 401(k) plans and other retirement accounts. This marks a significant shift in the traditional approach to retirement investing, which has largely focused on stock or bond funds and index products.

According to the White House, the goal of this initiative is to provide American workers with more investment options, aiming to improve their financial security in retirement. The statement emphasized that over 90 million Americans participate in employer-sponsored defined-contribution plans, yet most are currently restricted from investing in alternative assets. In contrast, wealthy investors and government workers often have access to such opportunities.

Alternative assets, such as private equity, real estate, and digital assets, are highlighted as offering competitive returns and diversification benefits. However, experts caution that these investments can be more speculative and sometimes illiquid, requiring careful consideration.

Industry Reactions and Support

Major asset management firms have expressed support for the move, recognizing the potential benefits of incorporating private assets into retirement portfolios. Companies like BlackRock (BLK) and KKR (KKR) have voiced their approval, noting that private assets such as real estate and infrastructure can enhance returns and provide protection during market downturns.

Larry Fink, chairman of BlackRock, stated in his annual investor letter: “Private assets are legal in retirement accounts. They're beneficial. And they're becoming increasingly transparent.” This sentiment reflects a growing acceptance of alternative investments within the financial industry.

Regulatory Developments in Washington

This executive order aligns with recent developments in Washington, where cryptocurrency has been gaining attention. The move comes after Congress’s “Crypto Week” in July, during which the House and Senate worked on several legislative measures related to digital assets.

One of the key pieces of legislation, the GENIUS Act, was signed into law by President Trump on July 18. This act establishes a regulatory framework for stablecoins like Tether. Additionally, the Clarity Act, which aims to define regulatory oversight of cryptocurrencies, and the Anti-CBDC Surveillance State Act, which seeks to prevent the Federal Reserve from creating central bank digital currencies, have passed in the House and are now awaiting Senate votes.

Implications for Investors

As the financial landscape continues to evolve, investors are being encouraged to stay informed about the potential opportunities and risks associated with alternative assets. While the inclusion of cryptocurrencies and private equity in retirement accounts could offer new avenues for growth, it is essential for individuals to carefully evaluate their investment strategies and seek professional advice when necessary.