Donald Trump is preparing to open up the $9 trillion US retirement market to investments in cryptocurrencies, gold, and private equity. The move would create new opportunities in the management of retirement savings.
The US president is expected to sign an executive order later this week that will allow 401(k) plans to include alternative investments beyond traditional stocks and bonds, according to the Financial Times, citing three insiders. These investments would span a wide range of asset classes, from cryptocurrencies and metals to funds focused on corporate buyouts, private credit, and infrastructure projects.
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Trillion-dollar market to gain crypto access
The executive order is expected to instruct regulators to examine the remaining regulatory barriers. After that, such alternative investments could be included in professionally managed funds for 401(k) savers. Americans have various options for retirement savings, including 401(k) plans, IRAs, Roth IRAs, and pension funds. A 401(k) is an employer-sponsored retirement account that allows for pre-tax contributions and often includes an employer match. The US 401(k) is similar to Switzerland’s second pillar (BVG), while IRAs resemble the third pillar (3a), offering individual, tax-advantaged retirement savings.
Niche offerings from providers like Fidelity already allow crypto investments within various US retirement plans. However, these are not widely available and are typically limited to a small percentage of the portfolio. The Trump administration has already begun easing restrictions on the use of cryptocurrencies in retirement accounts. In May, the Department of Labor repealed a Biden-era policy that discouraged 401(k) plan administrators from offering crypto investment options. The executive order is likely to accelerate this development.
Swiss pension funds lagging behind
In Switzerland, pension institutions are allowed to invest up to 15% of their portfolios in alternative assets - including cryptocurrencies. However, no Swiss pension fund is currently using this opportunity to any significant extent, as CVJ.CH confirmed with the Swiss Pension Fund Association (ASIP). The latest developments in the US do not change the current assessment, according to their media office.
"The association is not aware of any Swiss pension fund with a significant allocation to cryptocurrencies. This reluctance stems not only from regulatory uncertainty but also from high volatility. According to the Swiss National Bank, many cryptocurrencies are considered purely speculative assets. Moreover, the investment universe is limited, as the market capitalization of all cryptocurrencies, at around CHF 2 trillion, is small compared to the global financial system. As a result, crypto investments are poorly aligned with the requirements for security, profitability, and liquidity that pension funds must meet under BVV 2." - Statement by the Swiss Pension Fund Association (ASIP)
Many of these assessments have been outdated for a while. Jurisdictions across the globe, including the US, EU, and Switzerland, have established comprehensive regulatory frameworks for digital assets. Volatility is within the typical range for technology investments, and the total market capitalization of all cryptocurrencies - an easily verifiable figure - exceeds CHF 3.2 trillion, with sufficient liquidity for daily billion-scale investments via US ETFs. Yet the conservative stance is characteristic of the Swiss pension fund landscape, which has delivered a modest average annual return of 3.6% over the past decades.
