Admin eyes 401(k) to boost homeownership while prepping to expand investment in alts

Topline

• White House eyes 401(k) access for home down payments

• DOL finalizing rule proposal to expand retail access to alts

• Industry opposition stalls Senate crypto markup 

• SBA modernizes SBIC rules to boost capital deployment

• Quick hits

We’ve officially reached the one-year mark of President Donald Trump’s second term, and the administration’s norms-shattering agenda shows no signs of slowing. This week, Trump, Treasury Secretary Scott Bessent, and senior administration officials will join industry leaders, academics, and global heads of state at the World Economic Forum in Davos. While the president is expected to highlight elements of his domestic affordability agenda, attention is likely to focus on U.S. foreign policy, particularly renewed trade tensions with Europe following threats of a new round of tariffs tied to opposition from European allies to U.S. efforts to acquire Greenland.

Meanwhile, back in Washington, Congress is racing to fund the government. With funding set to lapse at the end of the month, lawmakers are working to advance a funding package to avoid another shutdown.

White House eyes 401(k) access for home down payments

The Trump Administration is preparing a policy proposal that would enable Americans to use funds from their 401(k) retirement accounts to make down payments on a home. President Trump is expected to unveil the plan this week in Davos. While the legal mechanics and implementation details are still under development, the anticipated proposal would mark a significant departure from current rules, which generally penalize early withdrawals from defined contribution plans.

Why it matters: The initiative is part of a broader housing affordability agenda aimed at expanding homeownership. This agenda has also included proposals to restrict certain large institutional investors (like PE) from purchasing single-family homes and efforts encouraging Fannie Mae and Freddie Mac to increase purchases of mortgage-backed securities to lower mortgage rates.

At the same time, the proposal intersects with growing momentum to expand retirement plan access to alternative assets. In August 2025, Trump signed an executive order directing federal agencies to facilitate greater inclusion of private equity, real estate, and digital assets in 401(k) plans. While alts may offer diversification and return potential, they also raise liquidity and valuation challenges, as many private assets cannot be readily bought or sold. Allowing retirement funds to be tapped for home purchases could increase liquidity demands on plan sponsors and managers, particularly as plans consider broader exposure to less-liquid alternative investments, adding a new layer of complexity to retirement plan design and fiduciary oversight.

Next steps: More details to come, but any meaningful change to 401(k) distribution rules will likely require congressional action, as those rules are defined in statute by ERISA and the tax code. Budget reconciliation could offer a potential path forward, as it requires only a simple majority in both chambers and avoids a Senate filibuster; however, slim margins, intraparty divisions, and election-year dynamics could complicate that route.

DOL finalizing rule proposal to expand retail access to alts

The Department of Labor (DOL) has submitted a proposed rule to the Office of Management and Budget for review that would aim to expand retail access to alternative investments through retirement plans, as directed by the 2025 EO. The proposal, which is titled Fiduciary Duties in Selecting Investment Alternative[s], signals an intent to clarify fiduciary duties and safe harbors related to including alternatives like private equity and crypto within 401(k) plan lineups. 

Why it matters: The 2025 EO directed the DOL and SEC to provide clarity around fiduciary standards and operational mechanics that would enable plan fiduciaries to offer exposure to private assets through target-date or professionally managed portfolios. While technically not prohibited under ERISA, plan fiduciaries have avoided such allocations despite the potential for higher net risk-adjusted returns due to litigation risk tied to fees, illiquidity, and transparency concerns. The proposal signals a shift away from prior guidance that had discouraged 401(k)s from investing in private capital and toward a principles-based fiduciary framework under ERISA. While some retirement plan providers have begun pursuing private market offerings for their plan participants, the EO and resulting policy shifts could open this market even further, creating a significant source of long-term capital for private markets.

Next steps: Once OMB review concludes, the proposal will be published for public comment and could lay the groundwork for broader retirement plan investment options.

Industry opposition stalls Senate crypto markup 

The Senate Banking Committee’s consideration of its comprehensive crypto market structure bill is delayed again after Coinbase CEO Brian Armstrong withdrew his support the night before the scheduled markup. Armstrong criticized the revised text as “materially worse than the status quo,” asserting it would have effectively banned tokenized equities and crippled DeFi innovation through excessive financial surveillance. The stunning reversal in support came as a surprise to the administration and other industry supporters who were pushing to advance the bill, despite some shortcomings, and led Sen. Tim Scott to postpone the markup as negotiations continue.

State of play: While the delay is a setback, there is a renewed willingness on behalf of the industry and policymakers to reach a compromise and advance legislation in the near term, though the path will not be easy. In addition to concerns around tokenization, DeFi, and stablecoin yield, policymakers will also have to address ethics concerns concerning public officials who have ties to crypto, which were not included in the latest version and could present a hurdle to securing bipartisan support. Others—including Sen. Judiciary Chairman Chuck Grassley—have expressed concern that provisions exempting non-custodial software developers from financial licensing pose illicit finance and money laundering risks. The window of opportunity to pass a regulatory framework before the legislative calendar becomes dominated by upcoming midterm elections is narrowing. If and until this happens, the SEC will continue to drive the policy agenda through  guidance, no-action relief, and anticipated rulemaking to usher crypto into mainstream finance.

SBA modernizes SBIC rules to boost capital deployment

The Small Business Administration (SBA) finalized a set of reforms to modernize its Small Business Investment Company (SBIC) program, a public-private partnership allowing professional investment managers to combine SBA-supplied capital with private equity and venture capital funds. Changes to the program, which governs how partners can deploy SBA-provided capital, intend to broaden access to capital for a greater number of entrepreneurs by reducing regulatory friction and enhancing efficiency. Key reforms include:

• Streamlined licensing: Updates certain eligibility requirements to streamline the Expedited Subsequent Fund Evaluation Process, allowing seasoned fund managers and investors to bypass duplicative administrative reviews when launching follow-on funds to shorten lag times between fundraising and capital deployment.

• Encouraging investment in strategic sectors:  Creates exemptions and targeted relief for businesses operating in strategic areas such as food production, manufacturing, advanced technology, and energy sectors, aligning private capital deployment with broader economic and national security priorities.

• Regulatory housekeeping:  Removes outdated provisions and clarifies key terms that govern SBIC investments to improve transparency for fund managers while standardizing oversight for SBIC program officials.

Why it matters: The SBIC program is a proven mechanism for scaling the impact of private capital by pairing it with public leverage and experienced fund managers. Modernizing the SBIC framework helps ensure the program remains a durable tool for deploying capital to U.S. entrepreneurs across the country to broaden the innovation ecosystem. Faster licensing, clearer rules, and greater flexibility for experienced managers will help accelerate the flow of capital to small businesses, manufacturers, and technology companies, particularly in regions and sectors that have historically faced barriers to private investment. Carta has long supported strengthening the SBIC program as a way to amplify private capital’s reach, and will continue to push for additional reforms to bolster the program. ​​

Quick hits

• SEC begins process to reform public company disclosures. The SEC has begun a comprehensive review of Regulation S-K, the core framework governing public company disclosures outside the financial statements. Chairman Paul Atkins announced the Commission is soliciting public input on how Reg S-K requirements can be updated to better emphasize material, decision-useful information and reduce disclosures that may be immaterial or unnecessarily burdensome. A key focus for Atkins is “Making IPOs Great Again.” In addition to litigation and proxy reforms, a disclosure regime more closely aligned with materiality could lower barriers to go public, reduce compliance burdens for existing public companies, and make public markets a more viable option for growth-stage firms. Public comments can be submitted here and are due April 13, 2026.
  

• Trump pushes for credit card rate cap. President Trump has called for a one-year, 10% cap on credit card interest and has signaled support for limiting interchange (swipe) fees, aligning populists with progressives in promoting affordability over Wall Street interests. But the broader response among policymakers has been far more skeptical as critics warn price controls on credit and payments could have downstream effects that hamper financial innovation, limit credit availability for higher-risk consumers, and entrench incumbents that can absorb regulatory costs more easily than startups. Congressional action would be required to implement any cap, but it's unlikely any effort will move forward at this point, even with Trump’s endorsement.

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