Labor Department Reverses Crypto Guidance for 401(k) Plans, Sparking Industry Reactions
May 30, 2025 – By Leo Almazora
The U.S. Department of Labor (DOL) has officially withdrawn its guidance regarding the use of cryptocurrency in 401(k) retirement plans, formerly issued in 2022. This significant reversal has generated discussions across the financial industry, particularly among fiduciaries who must navigate investment decisions for retirement savings.
A Move Toward Clarification
The Employee Benefits Security Administration (EBSA) of the DOL rescinded its previous advice that had advised fiduciaries to approach crypto investments with "extreme care." This guidance had been criticized by various stakeholders for seeming to apply a regulatory bias toward a particular asset class and for potentially stifling retirement plan options.
In a statement regarding the reversal, Labor Secretary Lori Chavez-DeRemer described the earlier guidance as a form of regulatory overreach. "The Biden administration’s Department of Labor made a choice to put their thumb on the scale," she remarked. "We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats."
While the DOL is not formally endorsing or prohibiting the inclusion of cryptocurrency in retirement plans, this latest decision seems to restore traditional fiduciary standards as outlined in the Employee Retirement Income Security Act (ERISA).
Positive Reception from Industry Experts
Reactions to the DOL’s announcement have been largely favorable among crypto advocates and financial industry leaders. The Investment Company Institute, which represents mutual fund and ETF providers, welcomed the DOL’s decision, stating it brings the agency back in line with legal standards. "As we noted in 2022, the prior guidance was inconsistent with law and lacked a legal basis," said a representative. The organization emphasized that the choice to incorporate cryptocurrency into retirement plans should rest with plan fiduciaries.
Stephan Shipe, founder and CEO of Scholar Financial Advising, also expressed support for the change, noting it reinstates necessary discretion for fiduciaries to consider cryptocurrency as an option for retirement plans. However, he reiterated that this does not alleviate their fundamental fiduciary duties and responsibilities.
Complex Reactions to Previous Guidance
The original 2022 DOL statement, which discouraged the use of digital assets, had received mixed reactions. Some viewed it as a practical warning aimed at protecting investors, while others criticized it for its intimidating tone and the implication that it effectively acted as a ban on crypto investments in 401(k) plans.
Miles Fuller, a former IRS official and current head of government solutions at TaxBit, remarked that the DOL’s earlier positioning was unusual as it specifically targeted cryptocurrency without a clear legislative basis. "The 2022 release, despite its ominous tone, really did nothing to actually change the law," he noted. He now believes the new Compliance Assistance Release No. 2025-01 will reassure fiduciary plan advisors that they can consider crypto as a viable investment option, contingent upon individual plan elements and market conditions.
Looking Ahead: Will Crypto Options Flourish?
Despite the more favorable regulatory stance, some experts caution against an immediate influx of cryptocurrency into retirement plans. Fuller opined that factors such as market conditions and time will likely be the primary drivers affecting the adoption of crypto options in 401(k)s. The emergence of crypto-based ETFs and growing institutional acceptance may also positively shape legal perspectives on crypto investments moving forward.
Conclusion
The DOL’s recent decision to rescind its previous guidance on cryptocurrency in 401(k) plans marks a pivotal shift, providing plan fiduciaries with greater autonomy in their investment choices. As the regulatory landscape continues to evolve, market participants will be keenly observing how these changes play out in the retirement investment arena.
With stakeholders now able to reassess their strategies regarding cryptocurrency in retirement planning, the next steps for fiduciaries will hinge on maintaining compliance with their existing legal obligations while considering the integration of digital assets into their investment offerings.
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