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The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) on Wednesday, May 28, rescinded a 2022 compliance release that previously discouraged fiduciaries from including cryptocurrency options in 401(k) retirement plans.
The 2022 guidance, generated by the prior EBSA leadership during the administration of then-President Joe Biden, had directed plan fiduciaries to exercise “extreme care” before adding cryptocurrency to investment menus.
In a press release announcing the guidance rollback, the agency stated, “This [2022] language deviated from the requirements of the Employee Retirement Income Security Act [ERISA] and marked a departure from the department’s historically neutral, principled-based approach to fiduciary investment decisions.”
EBSA stated that, going forward, it will neither endorse nor disapprove of plan fiduciaries who conclude that the inclusion of cryptocurrency assets in a plan’s investment menu is appropriate.
“[The Department of Labor is] making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats,” said U.S. Secretary of Labor Lori Chavez-DeRemer.
Furthering the President’s Crypto Vision
EBSA’s May 28 announcement dovetailed with the stance of President Donald Trump on the elevated role of cryptocurrency in his administration.
On Jan. 23, Trump signed an executive order establishing the Presidential Working Group on Digital Asset Markets to accelerate American innovation in digital finance. The order directed federal departments and agencies to notify the working group upon:
- Identifying any regulations and other agency actions that affect the digital assets sector; and,
- Issuing recommendations for rescinding or modifying those regulations/actions.
The Jan. 23 executive order also revoked the Biden administration’s Digital Assets Executive Order and the Treasury Department’s Framework for International Engagement on Digital Assets, which the Trump administration has stated undermined the country’s global role in digital finance.
“The growth of digital financial technology in America must remain unhindered by restrictive regulations or unnecessary government interference,” the Jan. 23 order stated.
On March 6, Trump signed an additional executive order to establish a strategic bitcoin reserve and a national digital asset stockpile.
The administration’s vision has carried through to Congressional Republicans. On April 1, Sen. Tommy Tuberville (R-Alabama) and Rep. Byron Donalds (R-Florida) reintroduced the Financial Freedom Act, which would prohibit the Department of Labor from “issuing a regulation or guidance that limits the type of investments that self-directed 401(k) account investors can choose through a brokerage window.” That bill has been referred to the House Committee on Education and Workforce.
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