The change will make it easier for retirement benefit programs to invest in cryptocurrency
The US Labor Department has formally revoked a policy of the Biden administration that dissuaded investing cryptocurrency in retirement plans like 401(k)s. The action, which was announced yesterday, reverses 2022 guidance that advised plan sponsors to be extremely cautious with digital assets.
That prior policy had warned fiduciaries against investing retirement accounts in crypto options due to market volatility, regulatory lack, and price uncertainty. The Labor Department back then had indicated that those were a risk to individual savers who were preserving for retirement.
By removing the guidance, the Labor Department says it’s restoring a more neutral stance on investment decisions. Labor Secretary Lori Chavez-DeRemer said the move is meant to return decision-making power to fiduciaries, not federal officials. “We’re rolling back this overreach and making it clear that fiduciaries, not D.C. bureaucrats, should make investment decisions,” she stated.
Industry groups like the American Bankers Association had grumbled that the early guidance was issued without public notice, alleging that it restricted innovation and investor choice. With the about-face, asset managers may now have greater latitude to include cryptocurrency products in retirement products—though they will still be obligated to meet their statutory obligations to act in the best interests of plan participants.
The shift reflects broader trends within Washington since the Trump administration took office. President Trump has incorporated pro-crypto language into his presidential campaign, promising to make the US a world leader in the crypto asset space. The Trump administration has already begun to reduce enforcement against some of the most high-profile crypto companies and begun reconsidering the regulation of virtual tokens.
Although this policy change may enable more crypto in retirement accounts, it raises questions about how regulators will find the balance between innovation and the protection of investors in the coming years.
