The Department of Labor (“DOL”) recently rescinded guidance issued under the Biden administration that discouraged the inclusion of cryptocurrency investments in 401(k) plan lineups.
As discussed in our Benefits Update dated March 29, 2022, DOL guidance released in 2022 instructed plan fiduciaries to exercise “extreme care” before adding a cryptocurrency investment option to a 401(k) plan’s investment options. In the 2022 guidance, DOL expressed serious concerns about exposing participants in a 401(k) plan to investments in cryptocurrencies due to significant risks of fraud, theft, and loss. Among other concerns, the DOL cited price volatility, the uncertainties associated with valuing assets, the evolving state of the law governing cryptocurrency markets, and the potential lack of participant knowledge about cryptocurrencies as reasons for this heightened standard of care.
On May 28, 2025, DOL issued Compliance Assistance Release No. 2025-01 (“2025 Release”), which updates the DOL’s position regarding cryptocurrency. The 2025 Release rescinds the 2022 guidance and signals a more neutral approach with respect to the inclusion of cryptocurrency investments in a 401(k) plan’s investment options. The 2025 Release points out that the “extreme care” standard is not found in the text of the Employee Retirement Income Security Act (“ERISA”) and appears to impose a higher standard of care on fiduciaries than the general fiduciary standard of care required under ERISA. In determining which investment options to offer participants, ERISA requires that plan fiduciaries act prudently under the circumstances and for the exclusive purpose of maximizing financial returns to the plan’s participants and beneficiaries. Therefore, the 2025 Release advises that while plan fiduciaries must consider all relevant facts and circumstances when evaluating and selecting investment options, DOL is neither endorsing nor prohibiting the inclusion of cryptocurrency investment options. In addition to cryptocurrency, the 2025 Release advises that the same reasoning and principles apply to investments in a wide range of digital assets, including tokens, coins, crypto assets, and other crypto derivatives.
Please contact Slevin & Hart for more information about how the 2025 Release may affect your plan.
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