DOL Rescinds Guidance Discouraging Crypto in 401(k) Plans

In 2022, the Department of Labor issued a compliance release discouraging the use of cryptocurrencies in 401(k) retirement plans. Today, the DOL’s Employee Benefits Security Administration rescinded that order, paving the way for plan fiduciaries to include cryptocurrencies in 401(k)s.

The original guidance told plan fiduciaries to use “extreme care” before adding cryptocurrencies to investment menus. But in a statement on Wednesday, the DOL said the guidance “marked a departure from the department’s historically neutral, principled-based approach to fiduciary investment decisions.”

“The Biden administration’s Department of Labor made a choice to put their thumb on the scale,” said U.S. Secretary of Labor Lori Chavez-DeRemer. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats.”

In June 2022, House Ways and Means Chairman Richard Neal (D-Mass.) said in a letter to the Government Accountability Office that he was worried about the lack of regulation for crypto investments. He asked the GAO to provide data about what type of employers are now offering crypto investments in tax-advantaged accounts, such as 401(k) plans. He also wanted information about how plan sponsors determine crypto valuations and fees, and any safeguards related to those investments.

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The regulatory environment related to crypto has become much friendlier under the Trump administration, especially at the Securities and Exchange Commission. Immediately after taking the role of acting chair of the SEC, Mark Uyeda unveiled a crypto task force led by Commissioner Hester Peirce to create a “comprehensive and clear” framework for digital assets while slamming the agency’s work in the space under previous Chair Gary Gensler. 

In February, Uyeda dismantled the Enforcement Division’s Crypto Assets and Cyber Unit in place under Gensler, replacing it with the Cyber and Emerging Technologies Unit, focusing on fraud committed using artificial intelligence and machine learning, social media, blockchain technology and crypto assets.