A new legislative proposal in the US aims to formally adopt an executive order established by President Donald Trump on allowing alternative assets, including cryptocurrencies, within retirement plans such as 401(k) accounts.

Republican Representative Troy Downing has introduced a bill in the House Financial Services Committee to give legal backing to Executive Order 14330, as reported by Politico on October 14.

The executive order, issued on August 7, asserts that every American planning for retirement should have access to alternative investments deemed suitable by their financial advisor. These alternatives may encompass private investments, real property, commodities, projects in infrastructure, strategies for lifetime income, and digital assets managed by investment firms.

Background

Setting government priorities through an executive order does not entail statutory authority; it can be rescinded by subsequent administrations or judicial rulings. For policies to attain permanence, the Congress needs to pass a legislative text in both chambers of government before it becomes law.

According to the executive order, the Department of Labor, the SEC, and the Treasury Secretary must assess and prioritize guidelines for 401(k) plans within a six-month timeframe.

The introduction of this bill comes amidst a government shutdown, highlighting that Congressional members can continue to propose and discuss legislation even during funding lapses.

Recent Developments

The intention to incorporate alternative assets, including cryptocurrencies, into US retirement portfolios has gained momentum over the past months.

In May, the Department of Labor rescinded prior guidance from the Biden administration which cautioned fiduciaries to proceed with extreme caution regarding cryptocurrency investments in 401(k) accounts. In September, following the executive order, a group of nine lawmakers urged SEC Chair Paul Atkins to swiftly implement the order and assist the 90 million Americans currently barred from investing in these alternative assets, promoting a secure and sufficient retirement.

In the United States, 401(k) plans are among the most popular employer-sponsored retirement saving options. Recent reports indicate that Americans had amassed a total of $9.3 trillion in 401(k) accounts as of June 30.

While some financial experts have raised concerns about the risks of integrating cryptocurrencies into 401(k) plans, there is considerable optimism within the cryptocurrency community regarding this development. André Dragosch, who oversees European research at Bitwise, previously mentioned that permitting cryptocurrency investments in US retirement frameworks could signify a pivotal advancement for Bitcoin’s acceptance, potentially attracting billions in fresh capital.