Millions of Americans saving for retirement through 401(k) accounts could have the option of putting their money in higher-risk private equity and cryptocurrency investments, according to an executive order signed on Thursday by President Donald Trump that could give those financial players long-sought access to a pool of funds worth trillions. There is no immediate change in how people invest part of their work earnings. Federal agencies would need to rewrite rules and regulations to allow the expanded choices, and that would take months or more to complete. But once done, employers could offer a broader array of mutual funds and investments to workers, according to the White House.

New plans could invest in alternative assets, particularly private equity, cryptocurrencies and real estate. The Republican president's order directs the Labour Department and other agencies to redefine what would be considered a qualified asset under 401(k) retirement rules. Americans' retirement plans are governed by a law known as the Employee Retirement Income Security Act of 1974, better known as ERISA. Employers are required by law to offer retirement options that are in the best interest of their employees, not Wall Street. Most retirement plans for Americans are made up of stock and bond investments, and to a much lesser extent, cash and heavily traded commodities such as gold. Trump's move rewards both the USD 5 trillion private equity industry, which for decades has wanted to compete for a role in retirement plans, and the cryptocurrency industry, whose executives strongly supported Trump's 2024 campaign as they aimed for more mainstream acceptance among Americans. The price of bitcoin was up 2 per cent on Thursday to USD 116,542 and has nearly doubled since Trump was elected.

Under Democratic President Joe Biden, federal regulators were to treat cryptocurrency investments with "extreme care" because of the extreme volatility of crypto. It is not uncommon for bitcoin, ethereum and other big cryptocurrencies to move up or down 10 per cent in a single day, whereas a 2 per cent or 3 per cent single-day move in the stock market would be considered historic. For cryptocurrency companies, which donated millions to Trump's campaign as well as his inauguration, one goal was to get their industry qualified under ERISA. Coinbase, one of the largest crypto companies in the United States, was also a major donor toward Trump's military parade in Washington this summer. Under Trump, the Securities and Exchange Commission dropped its lawsuit against Coinbase, where the Biden administration said crypto should be treated as a security. Crypto is particularly popular among young Americans. While volatile, bitcoin has generally moved upward since it was created by an anonymous programmer nearly 20 years ago. "It was inevitable that bitcoin would make its way into American 401(k)'s," said Cory Klippsten, the CEO of Swan Bitcoin.