In a new development, the U.S. Department of Labor (“DOL”), under the Trump administration, has withdrawn guidance that previously advised caution when adding cryptocurrencies and other digital asset products into 401(k) retirement plans. This aligns with the administration’s overall pro-crypto approach and causes worry for retirement savers and plan fiduciaries.
Background: Caution to Neutral
The DOL issued guidance in March of 2022 cautioning fiduciaries to apply “extreme caution” in extending to cryptocurrencies and digital assets as options in 401(k) Plans due to concerns about volatility, risks of fraud, and speculation surrounding the digital assets. The guidance also included a fiduciary duty to be prudent and act in the best interests of participants in the plan as required in ERISA.
On May 28, 2025, the DOL rescinded the guidance, stating the DOL’s “extreme caution” standard was not based in ERISA and stated the DOL should be neutral about different kinds of investments. Labor Secretary Lori Chavez-DeRemer disparaged the earlier guidance as an overreach that prejudiced investment options against cryptocurrency.
Implications for Plan Fiduciaries
Even with the policy shift, fiduciaries are still subject to ERISA’s requirements of prudence and loyalty. That is, while the DOL no longer openly discourages crypto investment, fiduciaries will still need to give careful consideration to whether such investments are appropriate for plan participants.
Philip Chao, a retirement plan consultant and certified financial planner, said the shift indicates a more cryptocurrency-positive attitude but does not excuse fiduciaries of their duties. “Employers are still required to act in the best interests of their employees, and providing volatile and speculative investments such as cryptocurrencies may subject them to legal issues if those investments do not perform well,” Chao said.
Industry Reactions and Concerns
The policy change has drawn divided opinion. Knut Rostad, head of the Institute for the Fiduciary Standard, labeled the decision a “big mistake,” citing that it takes away a precautionary signal for employers and investors. “Reversing the guidance sends the wrong signal by removing a yellow caution light and installing a green light for employers and 401(k) investors to deploy crypto,” Rostad said.
Stephen Hall, the legal director of Better Markets, thinks that the earlier guidance probably saved many investors from big losses during the crypto market collapse in late 2022, when a number of large crypto companies went out of business.
The Broader Crypto-Friendly Agenda
The DOL policy shift is one aspect of the Trump administration’s overall adoption of cryptocurrency. President Trump has committed to positioning the U.S. as the “crypto capital of the world,” and his administration has moved to bring digital assets into the financial system. Significantly, Trump-related media enterprise has disclosed intentions to invest $2.5 billion in Bitcoin, and Vice President JD Vance is set to address a prominent Bitcoin convention.
What Retirement Savers Should Think About
For direct investors, the addition of cryptocurrencies to 401(k) plans has advantages and disadvantages. The argument is that digital assets have the potential to provide diversification and a high rate of return. But according to experts, cryptocurrencies are extremely volatile and won’t be suited for everyone, especially those close to retirement.
Financial planners typically suggest that if investors want to invest in cryptocurrencies in their retirement portfolios, they must do so carefully and cap their exposure at a tiny fraction of their total investments. As usual, careful research and consultation with a financial planner is recommended before taking such a decision.
Final Thoughts
The DOL’s withdrawal of prior guidance regarding cryptocurrency and 401(k) plans by the Trump administration is a significant policy development that may affect the future of retirement investing. This action is part of a broader pro-crypto agenda, but it also shifts more of the burden onto plan fiduciaries to assess whether digital assets are appropriate for their plan participants. Employers, especially parties identified as fiduciaries (irrespective of the DOL memo), and investors should acknowledge the ongoing changes in the regulatory landscape and proceed with care when assessing potential investment in cryptocurrency in retirement accounts.
