Historically, the introduction of Crypto assets for pension funds 401(k).

Author丨CM

Twitter丨@cmdefi

Core viewpoint: Accelerate the maturation of the cryptocurrency market, provide national endorsement, the possibility of massive capital inflow, and a new "strategic coin-holding" pool.

On August 7, 2025, U.S. President Donald Trump signed an executive order allowing 401(k) retirement savings plans to invest in a more diversified range of assets, including private equity, real estate, and crypto assets newly introduced.

This policy is as straightforward as it seems.

• Provide "national-level" endorsement for the cryptocurrency market, releasing signals to promote the maturity of the cryptocurrency market.
• Pension funds expand diversified investments and returns, but introduce higher volatility and risk.

In the field of cryptocurrency, this is already enough to be recorded in history.

Looking at the development history of 401(k), a key turning point was during the Great Depression when pension reforms allowed for investment in stocks. Despite differing historical and economic contexts, this change bears many similarities to the current trend of introducing crypto assets.

I. The Pension System Before the Great Depression

In the early 20th century to the 1920s, pensions in the United States were mainly based on fixed income plans ( Defined Benefit Plan ), where employers promised to provide employees with a stable monthly pension after retirement. This model originated from the industrialization process in the late 19th century, aimed at attracting and retaining labor.

The investment strategy of pension funds at this stage is highly conservative. The mainstream view at the time was that pensions should prioritize safety rather than high returns. Due to the restrictions of the 'legal list' (Legalist) regulations, they were mainly confined to low-risk assets such as government bonds, high-quality corporate bonds, and municipal bonds.

This conservative strategy works smoothly during economic booms, but it also limits potential returns.

II. The Impact of the Great Depression and the Pension Crisis

The Wall Street stock market crash of October 1929 marked the beginning of the Great Depression, with the Dow Jones Industrial Average falling nearly 90% from its peak, triggering a global economic collapse. The unemployment rate soared to 25%, and countless businesses went bankrupt.

Although pension funds invested very little in stocks at the time, the crisis still hit them through indirect channels. Many employer companies went bankrupt and were unable to fulfill pension commitments, leading to interruptions or reductions in pension payments.

This has raised public concerns about the pension management capabilities of employers and the government, prompting federal intervention. In 1935, the Social Security Act (SocialSecurityAct) was introduced, establishing a national pension system, but private and public pensions are still largely managed at the local level.

Regulators emphasize that pensions should avoid "gambling" assets such as stocks.

Turning Point: After the crisis, the economic recovery was slow, and bond yields began to decline ( partly due to federal tax expansion ), which sowed the seeds for subsequent reforms. At this time, the situation of insufficient yields gradually became apparent, making it difficult to cover the promised returns.

3. Investment Shift and Controversies in the Post-Great Depression Era

After the Great Depression, especially during and after World War II in the 1940s-1950s, pension investment strategies began to slowly evolve from conservative bonds to equity assets, including stocks. This transition was not smooth and was accompanied by intense controversy.

The post-war economic recovery has stagnated in the municipal bond market, with yields dropping to a low of 1.2%, failing to meet the guaranteed returns for pensions. Public pensions are facing "deficit payment" pressures, increasing the burden on taxpayers.

At the same time, private trust funds began adopting the "Prudent Man Rule" ( Prudent Man Rule ), a rule that originated from trust law in the 19th century but was reinterpreted in the 1940s to allow for diversified investments in pursuit of higher returns as long as the overall approach is "prudent." This rule was initially applicable to private trusts but gradually began to influence public pensions.

In 1950, New York became the first state to partially adopt the prudent man rule, allowing pension funds to invest up to 35% of their equity assets ( in stocks ). This marked a shift from a "legal list" to flexible investing. Other states followed suit, such as North Carolina, which authorized investments in corporate bonds in 1957 and allowed a 10% allocation to stocks in 1961, increasing it to 15% by 1964.

This change has sparked significant controversy, with opponents ( mainly being actuaries and unions ) arguing that investing in stocks will repeat the mistakes of the 1929 stock market crash, placing retirement funds at risk of market volatility. Media and politicians have called it "gambling with workers' hard-earned money," expressing concerns that pensions could collapse during an economic downturn.

To ease the controversy, the investment ratio was strictly limited to an initial maximum of 10-20% (, with a priority for investing in "blue chip stocks." In the following period, benefiting from the post-war bull market, the controversy gradually disappeared, proving its return potential.

) Four, Subsequent Development and Institutionalization

By 1960, non-government securities accounted for more than 40% of public pensions. The holding rate of New York municipal bonds fell from 32.3% in 1955 to 1.7% in 1966. This shift reduced the burden on taxpayers but also made pensions more reliant on the market.

The Employee Retirement Income Security Act of 1974 (ERISA) was enacted, applying the prudent investor standard to public pensions. Despite initial controversies, stock investments were ultimately accepted, but this also exposed some issues, such as significant pension losses during the 2008 crisis, reigniting similar debates.

( V. Signal Release

The current introduction of 401)k### crypto assets is highly similar to the previous controversy over introducing stock investments, as both involve a shift from conservative investments to high-risk assets. Clearly, the maturity of crypto assets is currently lower and their volatility is higher, which can be seen as a more aggressive pension reform, also signaling some messages from this point.

The promotion, regulation, and education of crypto assets will advance to a new level to assist people in their acceptance and risk awareness of these emerging assets.

From a market perspective, the inclusion of stocks in pension plans benefits from the long bull trend in the US stock market, and for crypto assets to replicate this path, they must also emerge from a stable and upward market. At the same time, since 401(k) funds are essentially locked.

Buying cryptocurrencies with pension funds is equivalent to "hoarding coins," which is another form of "cryptocurrency strategic reserves."

No matter how you interpret it, this is a huge positive for Crypto.

Section 6, the meaning and specific operation mechanism of附-401(k)