On Might 28, 2025, the US Division of Labor (the “Labor Division”) issued Compliance Assistance Release No. 2025-01 (the “2025 Launch”), memorializing the Labor Division’s choice to rescind Compliance Release No. 2022-01 (the “2022 Launch”), which had discouraged plan fiduciaries from providing cryptocurrencies of their 401(okay) plans. The 2025 Launch defined that, by rescinding the 2022 Launch, the Labor Division was returning to its historic strategy of taking a impartial commonplace towards specific funding varieties and methods by “neither endorsing, or disapproving of, plan fiduciaries who conclude the inclusion of cryptocurrency in a plan’s funding menu is acceptable.”
Historical past and Influence of the 2022 Launch
When it was issued in March 2022, the 2022 Launch created a stir inside the advantages business as a result of the Labor Division emphasised it had “severe issues” concerning the prudence of cryptocurrency investments, and warned plan fiduciaries to “train excessive care”—a typical not present in ERISA’s statutory textual content—earlier than contemplating providing cryptocurrencies of their plans. As well as, the 2022 Launch instructed—opposite to current Labor Division laws—that plan fiduciaries wanted to monitor the person investments obtainable to contributors by a self-directed brokerage window. Particularly, the 2022 Launch acknowledged that the Labor Division was intending to examine plans that provided cryptocurrency investments, and warned plan fiduciaries that they “ought to anticipate to be questioned about how they’ll sq. [offering cryptocurrency investments in a brokerage window] with their duties of prudence and loyalty.”
As a result of it appeared the Labor Division was searching for to impose heightened fiduciary obligations on cryptocurrency investments by the 2022 Launch, a plan recordkeeper introduced a authorized problem to the 2022 Launch below the Administrative Process Act (“APA”). Primarily based partially on the Labor Division’s illustration within the lawsuit that the 2022 Launch was merely non-binding sub-regulatory steerage that didn’t prohibit plan fiduciaries from providing cryptocurrency investments of their 401(okay) plans, the US District Court docket for the District of Columbia dominated in August 2023 that the 2022 Launch was not a last company motion (i.e., it didn’t have the drive of regulation) topic to authorized overview below the APA. The district court docket dismissed the authorized problem and the 2022 Launch remained in impact.
In its public statements, the Labor Division made clear that its goal in issuing the 2022 Launch was to discourage plan fiduciaries from providing cryptocurrency investments of their 401(okay) plans. For instance, the Labor Division emphasised in its response to written questions from Congress following a June 2023 listening to that it had issued the 2022 Launch to “alert plan fiduciaries to enforcement positions the Division is taking over problems with concern.” The Labor Division additionally conceded, that regardless of the warning within the 2022 Launch, it had not elevated its investigative exercise into brokerage home windows.
Each time a federal company points strongly worded steerage just like the 2022 Launch, these impacted by the steerage pay shut consideration. So despite the fact that the 2022 Launch didn’t have the drive of regulation or impose heightened fiduciary obligations, it supported the Labor Division’s mission to restrict the expansion of cryptocurrency investments in 401(okay) plans. For instance, whereas the value of bitcoin is presently up greater than 160% because the issuance of the 2022 Launch and the market cap for cryptocurrencies now exceeds $3 trillion, the Government Accountability Office (“GAO”) reported in November 2024 that cryptocurrency investments in 401(okay) plans account for “considerably lower than 1 % of the 401(okay) market, whether or not measured by plans, contributors, or property.” In addition, the GAO famous that 401(okay) plans weren’t providing cryptocurrency investments of their core plan lineups. Moderately, cryptocurrency investments, to the extent obtainable, had been virtually solely provided to contributors by self-directed brokerage home windows, together with the big selection of different non-designated investments (e.g., mutual funds, ETFs, shares, bonds, CDs, and many others.) obtainable in these brokerage home windows. Acknowledged one other method, the contributors investing in cryptocurrencies had been self-selecting these investments among the many myriad obtainable choices of their plan’s brokerage window,
The New Administration’s Strategy to Cryptocurrencies
It was not that shocking that the Labor Division below President Donald Trump rescinded the 2022 Launch. Shortly after his inauguration, President Trump signed an executive order setting forth his administration’s policy “to assist the accountable development and use of digital property, blockchain expertise, and associated applied sciences throughout all sectors of the economic system.” Since that point, the US Securities and Alternate Fee (“SEC”), Commodity Futures Buying and selling Fee (“CFTC”), and different federal companies have voluntarily dismissed lots of the pending enforcement actions concentrating on the cryptocurrency business that had been filed throughout the Biden administration. The SEC additionally fashioned a “Crypto Task Force” to set up a transparent regulatory framework for cryptocurrencies, issued new guidance and commentary on a variety of cryptocurrency-related matters, and recently rescinded Staff Accounting Bulletin 121, which imposed cryptocurrency-specific necessities and made it troublesome for banks and different monetary establishments to present cryptocurrency-custody providers.
Though different federal companies have taken proactive steps to promote cryptocurrency below the Trump Administration, the Labor Division below Secretary Lori Chavez-DeRemer has taken a extra impartial strategy. Whereas the Labor Division rescinded the 2022 Launch, the 2025 Launch doesn’t explicitly encourage or promote the inclusion of cryptocurrency investments in 401(okay) plans. Moderately, it emphasizes that, when plan fiduciaries are evaluating any specific funding, together with cryptocurrency, they need to contemplate “all related information and circumstances” which, because the US Supreme Court docket defined in Fifth Third Financial institution v. Dudenhoeffer, “essentially will likely be context particular.”
Is There a Future for Cryptocurrencies in 401(okay) Plans?
Wanting ahead, it’s an open query whether or not cryptocurrency investments, together with bitcoin, will turn out to be extra distinguished in 401(okay) plans. Whereas it’s unlikely that 401(okay) plans—for operational, structural, and different fiduciary issues, together with volatility—will provide direct investments in cryptocurrencies of their plan lineups within the close to future, contributors might proceed to search publicity to cryptocurrencies by self-directed brokerage home windows, together with by investing within the spot bitcoin ETPs, which have seen greater than $85 billion in web inflows since they had been accepted by the SEC in January 2024. It additionally stays to be seen whether or not plans and asset managers will present contributors with publicity to cryptocurrencies by incorporating modest allocations to cryptocurrency investments of their blended or asset allocation funds, together with target-date funds. After all, if plan fiduciaries are contemplating providing an funding with an allocation or publicity to cryptocurrency, they need to observe their established fiduciary processes to guarantee they perceive the traits of every such funding to decide whether or not they’re within the greatest curiosity of the plan and its contributors and contribute to an applicable and diversified mixture of funding choices.
Will the Labor Division Proceed on the Path to Investment Neutrality?
In the press release accompanying the 2025 Release, Labor Secretary Chavez-DeRemer emphasised that the Labor Division was “rolling again th[e] overreach” of the 2022 Launch to “mak[e] it clear that funding selections ought to be made by fiduciaries, not DC bureaucrats.” Whereas the 2025 Launch focuses on cryptocurrency investments in 401(okay) plans, will the Labor Division take a equally impartial stance to different kinds of investments, together with non-public fairness and alternate options, lifetime revenue, and ESG?
In late Might 2025, the Division of Justice knowledgeable the US Court docket of Appeals for the Fifth Circuit within the pending problem to President Joe Biden DOL’s ESG Rule that the Labor Division would “interact in a brand new rulemaking on the topic of the challenged rule” as a part of the Trump Administration’s spring regulatory agenda. There have additionally been stories that President Trump is contemplating an govt order directing federal companies, together with the Labor Division, to examine the inclusion of personal funds in retirement plans.
Given these developments, we might be taught quickly whether or not the Labor Division’s return to funding neutrality extends past cryptocurrencies. Nonetheless, the extra vital query from a regulatory readability perspective for the advantages business is: “Will this neutrality lengthen past the present administration?” Solely time will inform.
