On 28 May 2025, the Department of Labor rescinded the 2022 guidance issued under Biden administration regarding 401(k) plans. This guidance had urged retirement plans managers to exercise “extreme care” before adding cryptocurrency option to their investment menu, effectively discouraging sponsors from offering high-risk assets such as leveraged buyouts or digital tokens. By removing the language concerning “extreme care”, Trump reframed the Department of Labor’s stance as neutral, neither endorsing nor opposing cryptocurrency in retirement plans, clearing the way for retirement plans to allow private assets more freely.

The change was more than a technical adjustment—it marked a decisive policy break. Since the introduction of 401(k)s in the early 1980s, regulators had generally steered retirement plans toward safe, transparent, and liquid securities. Trump’s reversal opened the door to illiquid, and volatile asset classes, aligning with his broader deregulatory agenda. From loosening banking rules to halting SEC investigations into digital assets, the administration has consistently favoured reducing oversight in financial markets. It reflects a far more tolerant approach than his predecessors and delivers on his pledge to “Make America Wealthy Again” by expanding everyday American’s investment options to alternative asset classes, with riskier and less-regulated asset classes.

The timing is no accident. With an aging population and declining pension contributions, retirement funds face growing pressure to deliver higher returns. Bitcoin, which has at times delivered spectacular gains, offers an appealing narrative of performance. Yet with a market capitalisation of only about $1.5 trillion in 2025, the digital asset sector remains too small and volatile to absorb the trillions held in retirement accounts. For the financial industry, the real prospect of sustained returns lies in private equity and other alternative assets, where managers see an opportunity to unlock hundreds of billions of dollars in new inflows.

The push for deregulation was also fuelled by lobbying. Private capital groups, through trade associations such as the American Investment Council, have pressed for years to gain access to retirement accounts. Their efforts were rewarded not only with regulatory change but also with political recognition: the industry played a significant role in Trump’s 2024 election victory. Deregulation thus provided both a policy win for Wall Street and a symbolic win for an administration keen to brand itself as a champion of financial liberalisation.

Source: paulweiss.com

In practice, the shift is already underway. Blackstone, KKR, and Apollo have in recent months formalised partnerships with major asset managers—including Vanguard, Capital Group, and State Street—to bring investments to millions of retirement savers. Empower, one of the largest US 401(k) plan providers, has also struck deals with Apollo, Partners Group, and Goldman Sachs to offer private market funds alongside traditional options. Industry leaders argue these products will give retail investors access to diversification and higher returns previously reserved for institutions.

Comparisons abroad reinforce this trajectory. Australia’s superannuation system—one of the largest retirement schemes in the world—already allocates significantly to infrastructure, private equity, and other alternatives. For US firms, gaining access to 401(k)s creates the opportunity to replicate that model and, crucially, to secure a stable inflow of long-term retail capital.