Three years ago, the Department of Labor had “serious concerns,” effectively creating a ban on including crypto in 401(k) plans. But things seemed to be shifting where crypto is concerned, as President Trump has vowed to make the U.S. the "crypto capital of the planet." Following this goal, the DOL has withdrawn its 2022 guidance that cautioned trustees against including cryptocurrencies in 401(k) plans.
To further show his commitment to crypto, on Tuesday, President Trump’s social media company, Trump Media and Technology Group, announced it will raise about $2.5 billion to invest in bitcoin.
Shortly after he took office in January, President Trump appointed “CryptoMom” Hester Peirce, who was appointed by Trump to the Securities and Exchange Commission in 2018, to lead the SEC’s new task force to develop clear rules for digital assets, encouraging compliance and reducing fraud.
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Last month, Senator Tommy Tuberville reintroduced the Financial Freedom Act, which would give retirement plan participants the ability to control how their assets are invested, while reversing DOL regulatory guidance on cryptocurrency.
At the time, Sen. Tuberville said that the DOL guidance threatens that employers and investment firms could be subject to investigation and enforcement actions should they allow individuals using brokerage windows to invest in cryptocurrency.
Back in 2022, following the DOL’s warning to fiduciaries, Sen. Tuberville introduced the legislation that would prohibit the DOL from limiting the types of investments that workers can invest in through their brokerage accounts, including 401(k)s. In addition, a San Francisco-based retirement plan provider filed a lawsuit against the DOL over its crypto warning.
Related: Crypto comeback? Senate bill would allow digital assets in 401(k)s, while restricting DOL oversight
The 2022 DOL guidance directed plan fiduciaries to exercise “extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu.”. This language deviated from the requirements of the Employee Retirement Income Security Act and 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.”
By rescinding the 2022 guidance, the department reaffirms its neutral stance, neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate, according to a statement.
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
