On Could 28, 2025, the Division of Labor (DOL) rescinded its 2022 steerage that cautioned retirement plan fiduciaries to train “excessive care” in allowing cryptocurrency and different digital asset investments in retirement plans. This rescission alerts the DOL will take a extra impartial method to such investments, however plan fiduciaries ought to proceed to judge and monitor plan funding choices in accordance with their basic fiduciary duties below ERISA.
Background on Prior Guidance
In 2022, below the Biden administration, the DOL launched steerage reminding plan fiduciaries that “fiduciaries should act solely within the monetary pursuits of plan contributors and cling to an exacting customary {of professional} care” and advising plan fiduciaries to train “excessive care” earlier than together with a cryptocurrency possibility in a retirement plan’s funding menu.
The DOL seemed on the following traits of cryptocurrency when it issued its 2022 steerage:
- Excessive value volatility ensuing from fictitious commerce reporting and speculative valuation methodologies;
- Elevated vulnerability because of decrease safety for cryptocurrency accounts, leading to an elevated danger of hacking and theft; and
- Uncertainty within the regulatory atmosphere relating to cryptocurrencies, which may outcome within the 401(okay) plan partaking in illegal buying and selling.
Impression of 2025 Recission
The 2025 steerage not advises plan fiduciaries to train “excessive care” earlier than together with a cryptocurrency possibility in a retirement plan’s funding menu, however does emphasize {that a} plan fiduciary’s resolution must be context-specific and contemplate all related details and circumstances. What has not modified is that plan fiduciaries are nonetheless required to behave with care, ability, prudence and diligence in each the preliminary choice and steady monitoring of funding choices, together with digital property. As such, we could start to see extra cryptocurrency-based funding choices, particularly if plan contributors demand them and plan fiduciaries can get comfy with such choices.
Plan fiduciaries ought to proceed to completely evaluate funding choices and diligently doc their decision-making course of.
