Downing said in a statement, “Alternative investments can strengthen the financial security of millions of Americans saving for retirement. I commend President Trump’s leadership in democratizing finance and am proud to lead this effort in Congress.”

Background: Trump’s Order and Policy Shift

On August 7, 2025, Trump signed an order directing the Department of Labor (DOL), SEC, and Treasury to explore ways to expand access to alternative assets in 401(k) plans. The move reversed the Biden administration’s 2022 guidance, which warned against crypto exposure due to high volatility and investor risk.

Under Trump’s leadership, the restrictions were lifted in May 2025.The administration supported more access to digital assets and private equity for long-term portfolios. The new bill aims to lock in that change and prevent future policy swings.

Support, Concerns, and What’s Next

The proposal has four Republican co-sponsors: Byron Donalds, Buddy Carter, Warren Davidson, and Barry Moore. Sources say there is no Senate version of the bill yet.

Supporters argue that the plan will diversify portfolios and improve long-term returns. Critics warn about market risks, high fees, and unsuitable products for average investors. The DOL’s final rule must balance freedom and protection for plan participants.

Experts estimate that America’s $12 trillion retirement fund market could bring huge capital into crypto if the bill passes. As Politico and Reuters reported, the effort aims to give Trump’s “financial democratization” policy lasting legal force.

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Trump’s decision caused outflows seen midweek to quickly reverse into inflows. According to the CoinShares report, investors initially made $1 billion in crypto outflows earlier in the week. However, the government’s green light for cryptocurrencies balanced these outflows with $1.57 billion inflows. As a result, the net inflow reached $578 million. 

The US recorded the highest crypto inflows last week. James Butterfill, Head of Research at CoinShares, stated that markets gained positive momentum after digital assets were allowed in 401(k) plans. On the other hand, crypto ETF volumes declined by 23% compared to last month due to the usual summer slowdown. 

Shifting Balance Between Bitcoin and Ethereum Investments 

Ethereum had long been the leader in the altcoin market. In recent weeks, Ethereum investment products saw record inflows of around $4.39 billion. The previous week, Ethereum received $133.9 million while Bitcoin investments experienced a $404 million outflow. However, this picture has changed in recent weeks. 

Bitcoin showed recovery signs after two consecutive weeks of outflows, rapidly closing the gap with Ethereum. Samson Mow, CEO of Jan3, notes that most Ethereum investors originally held significant Bitcoin during the ICO period and converted their Bitcoin to Ethereum to support Ethereum’s price. 

According to Butterfill, Bitcoin’s recovery supports the positive market sentiment. The balance between these two major crypto assets indicates strengthening investor confidence. Additionally, Trump’s 401(k) move helped sustain this optimism. 

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