EddieJayonCrypto
29 May 25
The US Department of Labor has rescinded its 2022 compliance release that advised fiduciaries to exercise "extreme care" before including cryptocurrency investment options in 401(k) retirement plans. The department is reverting to a neutral stance consistent with the Employee Retirement Income Secur...
The US Department of Labor (DOL) has formally rescinded its 2022 guidance that urged fiduciaries to exercise "extreme care" before including cryptocurrencies in 401(k) retirement plans. This move restores a neutral stance aligned with the Employee Retirement Income Security Act (ERISA), emphasizing that investment decisions should be made by fiduciaries based on prudent review rather than singling out crypto for special caution.The 2022 compliance release, "Compliance Assistance Release No. 2022-01," had highlighted cryptocurrency's volatility, custodial complexities, and regulatory uncertainties as grounds for heightened scrutiny, deviating from the DOL's prior principles-based approach. Critics argued this standard exceeded ERISA’s fiduciary duty requirements, which call for care, skill, prudence, and diligence under prevailing circumstances.By withdrawing this release, the Department reestablishes a consistent application of fiduciary principles, allowing retirement plan administrators to evaluate crypto investments on a case-by-case basis while still fulfilling their obligations to act in the best interest of plan participants. US Secretary of Labor Lori Chavez-DeRemer stated, "We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats."Although the Department’s announcement neither endorses nor disapproves of cryptocurrencies as qualified retirement plan assets, it clarifies that discretion rests with fiduciaries under ERISA. This reinstated framework requires fiduciaries to conduct a prudent and contextual evaluation of all relevant factors without imposing asset-specific directives.This development represents a significant regulatory shift toward allowing more flexibility for 401(k) plans considering crypto options, reflecting broader trends in the financial industry’s cautious embrace of digital assets.Fiduciaries now have the opportunity to incorporate cryptocurrencies in retirement portfolios responsibly, basing decisions on comprehensive risk assessments and fiduciary duties rather than default warnings. This change may play a pivotal role in how crypto assets integrate into mainstream long-term investment strategies moving forward.