The U.S. Department of Labor has withdrawn guidance that discouraged employers from offering cryptocurrency investments in workplace retirement plans, marking a policy shift that could expand digital asset options for millions of American workers.
The Employee Benefits Security Administration rescinded a 2022 compliance release Wednesday that had warned plan fiduciaries to use “extreme care” before adding cryptocurrency to 401(k) investment menus. The previous guidance created additional scrutiny for employers considering digital assets in their retirement offerings.
Policy reversal removes regulatory pressure
The 2022 guidance had effectively steered plan sponsors away from cryptocurrency investments by suggesting heightened fiduciary liability concerns. Industry observers had criticized the guidance as going beyond standard Employee Retirement Income Security Act requirements.
“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 D.C. bureaucrats.”
The department now returns to what officials describe as a neutral position on cryptocurrency investments, neither endorsing nor discouraging their inclusion in retirement plans.
Impact on workplace retirement plans
The policy change removes regulatory barriers that may have prevented some employers from considering cryptocurrency options for their 401(k) plans. Plan fiduciaries can now evaluate digital assets using standard fiduciary principles without the additional cautions outlined in the rescinded guidance.
The move affects the regulatory environment for plan sponsors who manage retirement benefits for approximately 60 million American workers covered by employer-sponsored 401(k) plans.
Under the revised approach, plan fiduciaries must still meet their standard duty of prudence when selecting investments, but they no longer face the heightened scrutiny specifically targeting cryptocurrency that was outlined in the 2022 release.
Return to traditional oversight approach
The department’s action restores what officials call a principles-based approach to fiduciary investment decisions. This method allows plan sponsors to evaluate investments based on traditional fiduciary standards rather than asset-class-specific guidance.
The rescission takes effect immediately and applies to all ERISA-covered retirement plans. Plan sponsors considering cryptocurrency investments will now operate under the same regulatory framework that applies to other investment options.
The Employee Benefits Security Administration issued the rescission as part of the department’s broader review of guidance issued during the previous administration.
