DOL Rescinds Prior Guidance on Cryptocurrency in 401(k) Plans

On May 28, 2025, the U.S. Department of Labor (DOL) released Compliance Assistance Release No. 2025-01, which rescinds prior 2022 guidance that cautioned plan fiduciaries to exercise “extreme care” before they considered adding a cryptocurrency option to a 401(k) plan’s investment menu for plan participants.

According to the DOL, the standard of “extreme care” deviated from the requirements of the Employee Retirement Income Security Act (ERISA). Under ERISA, fiduciaries must act prudently and solely in the financial interests of plan participants, among other standards of conduct.

The DOL further stated that the prior guidance marked a departure from the agency’s historically neutral, principled-based approach to fiduciary investment decisions. In a news release, the DOL explained that rescinding the 2022 guidance “reaffirms its neutral stance [by] neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate.”

Action Steps

The DOL guidance aligns with the Trump administration’s efforts to promote the U.S. cryptocurrency industry, although it is unclear whether other regulatory actions will follow.
Plan fiduciaries who oversee or allow investments in any digital assets should continue to closely monitor developments in this area and consult with their benefit advisors to ensure full compliance with ERISA’s fiduciary responsibilities.

ERISA Fiduciary Obligations

Compliance Assistance Release No. 2025-01 highlights the following:

When evaluating any particular investment type, a plan fiduciary’s decision should consider all relevant facts and circumstances and will “necessarily be context specific.”
ERISA requires a fiduciary to curate a plan’s investment menu “with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent [person] acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims” for the “exclusive purpose” of maximizing risk-adjusted financial returns to the plan’s participants and beneficiaries.

Digital Assests

Although the guidance specifically references cryptocurrencies, the DOL clarified that the same reasoning and principles also apply to a wide range of digital assets, including those marketed as “tokens,” “coins,” “crypto assets,” and “any derivatives thereof.”