Washington, D.C. - Today, the U.S. Department of Labor (DOL) rescinded its 2022 guidance that cautioned against including cryptocurrencies in 401(k) investment menus. This reversal could open the door for billions in retirement savings to flow into digital assets. (Source: Benzinga, Yahoo Finance LLC, Date: Today)
The original guidance, issued in March 2022, urged plan fiduciaries to exercise "extreme care" before adding crypto options. The DOL now acknowledges this standard isn't mandated by federal law. This effectively discouraged most employers from offering crypto investment options.
The DOL is returning to its usual approach of neither endorsing nor disapproving specific investment types. Plan fiduciaries can assess cryptocurrency investments using standard fiduciary principles. They will no longer be held to the "extreme care" standard.
Under the Employee Retirement Income Security Act, fiduciaries must make investment decisions based on prudence and participants' best interests. The DOL clarified that decisions should be "context specific," considering "all relevant facts and circumstances." This is the same standard applied to traditional investments.
The 401(k) market holds roughly $7.4 trillion in assets across nearly 650,000 plans. Even a small allocation to cryptocurrencies could result in significant capital flows into digital assets.