The US Department of Labor (DOL) has rescinded its 2022 guidance, which discouraged fiduciaries from including cryptocurrency investments in 401(k) retirement plans, citing an “overreach” by the previous administration.
At this early stage in the history of cryptocurrencies, the Department has serious concerns about the prudence of a fiduciary’s decision to expose a 401(k) plan’s participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies. These investments present significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft, and loss.
The EBSA release noted that the Securities and Exchange Commission (SEC) staff had cautioned that digital asset investments were “highly speculative.” It also cited custodial, recordkeeping, and valuation concerns as part of the reasons for the warning.
However, the judge considered that, even if it was rescinded, it would not have changed the DOJ’s view about cryptocurrencies.
According to the DOL’s May 28 release, the language used in the 2022 guidance “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.”
“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,” the statement reads.
Moreover, US Secretary of Labor, Lori Chavez-DeRemer, criticized the previous administration for overstepping with the 2022 guidance, affirming that “The Biden administration’s Department of Labor made a choice to put their thumb on the scale.”
