Last week, the US Department of Labor’s Employee Benefits Security Administration rescinded a 2022 compliance release that discouraged fiduciaries from including cryptocurrency options in 401(k) retirement plans. This was part of a broader attack on the digital asset sector during the Biden Administration.
In the prior guidance, “extreme care” was advised before allowing crypto to be an option for retirement accounts. This statement chilled the retirement sector’s participation in crypto. It also diverged from the agency’s historical neutrality regarding investment guidance.
The new guidance is one of neutrality, neither advocating nor disapproving of crypto inclusion.
“The Biden administration’s department of labor made a choice to put their thumb on the scale,” said 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 D.C. bureaucrats.”
Bradley Fay, a partner in Seward & Kissel’s ERISA, Employee Benefits and Executive Compensation group, shared a comment on this change in approach. Fay said it is just a return to the agency’s longstanding stance not to favor any asset class.
“The removal of the prior guidance, which directed plan fiduciaries to act with extreme care when considering cryptocurrency, was not a surprise due to the President’s support of cryptocurrency both on the campaign trail and since taking office.”
The Trump Administration has embraced digital asset innovation with various agencies and the legislature working towards a new regulatory regime to support the development of crypto while protecting investors. The goal is to make the United States a global hub of innovation in cryptocurrency.
