Main Points：
- On May 28, 2025, the U.S. Department of Labor officially rescinded its March 2022 guidance urging fiduciaries to exercise “extreme care” when considering cryptocurrencies for 401(k) plans.
- The rescission restores the Department’s historically neutral, principles-based approach, affirming that investment decisions belong to fiduciaries rather than federal bureaucrats.
- Major plan providers such as Fidelity, which previously opposed the 2022 cautionary guidance, are now positioned to expand crypto offerings, although actual inclusion in plan menus remains limited.
- Legislative and regulatory developments—including bipartisan bills in Congress and the broader SECURE Act 2.0 reforms—could further streamline crypto integration in retirement portfolios.
Background: The 2022 “Extreme Care” Guidance
In March 2022, under the Biden administration, the Department of Labor (DOL) issued Compliance Assistance Release No. 2022-01, directing 401(k) plan fiduciaries to exercise “extreme care” before adding direct cryptocurrency investment options to plan menus. This language, absent from the Employee Retirement Income Security Act (ERISA) itself, represented a departure from the DOL’s traditional, neutral stance toward investment choices and effectively signaled to plan sponsors that including crypto could trigger regulatory scrutiny.
The 2022 release warned of “significant risks and challenges” associated with crypto allocations, citing volatile valuations, fraud vulnerabilities, custody and record-keeping complexities, and valuation concerns—factors the DOL deemed potentially detrimental to participants’ retirement assets. Although this guidance stopped short of an outright ban, its cautionary tone led many plan sponsors to remove or refrain from adding digital assets, thereby stalling crypto’s entry into mainstream retirement vehicles.
The Rescission: Restoring Fiduciary Discretion
On May 28, 2025, the DOL’s Employee Benefits Security Administration (EBSA) formally rescinded the 2022 guidance, citing that it “deviated from the Department’s historically neutral, principled-based approach to fiduciary investment decisions” and constituted “overreach” by tilting the scales against crypto options.
Labor Secretary Lori Chavez-DeRemer emphasized that “investment decisions should be made by fiduciaries, not D.C. bureaucrats,” and that the rollback clarifies the DOL’s commitment to allowing plan sponsors to independently evaluate whether crypto belongs in their investment menus. With the guidance withdrawn, fiduciaries now face a true “green light”—or at least a neutral one—to consider digital assets without fear of automatic DOL disapproval.
Immediate Implications for Plan Sponsors
Expanded Flexibility, Continued Prudence
Asset managers and recordkeepers now possess formal flexibility to develop or scale crypto-linked options, such as self-directed brokerage windows or specialty subsections allowing exposure to Bitcoin, Ethereum, or crypto-linked exchange-traded products. Fidelity Investments, which launched its Digital Assets Account in 2022 and publicly opposed the “extreme care” directive, hailed the rescission as a long-awaited deregulatory victory.
Despite this newfound discretion, industry experts caution that widespread inclusion of crypto in 401(k) menus will remain measured. Many plan sponsors will likely adhere to conservative allocation guidelines—often suggesting no more than 1%–3% of a portfolio be allocated to digital assets—to balance potential upside with fiduciary duty to minimize undue risk.
Operational and Compliance Considerations
While the regulatory barrier has been lowered, plan sponsors must still comply with ERISA’s core fiduciary requirements—duty of loyalty, duty of prudence, and obligation to act in participants’ best interests. This entails thorough due diligence on crypto custodians, evaluating cybersecurity protocols, assessing fund expense ratios, and ensuring transparent participant disclosures. Failure to follow these protocols can still expose fiduciaries to litigation or DOL investigation, as highlighted in the March 2022 release DOL.
Industry Reactions and Product Innovations
Fidelity’s Next Steps
Immediately following the rescission, Fidelity indicated it would accelerate development of crypto-enabled retirement products, including potential expansion of its Digital Assets Account directly within 401(k) plan menus. Such enhancements could allow participants to allocate a small percentage of savings to spot Bitcoin or Bitcoin futures funds, subject to plan sponsor approval.
Emergence of Crypto IRAs and Mixed Funds
Separately, self-directed Crypto IRAs continue to gain traction, with providers like BitcoinIRA and others marketing tax-advantaged alternatives for investors seeking broader digital asset exposure outside employer plans. Hybrid fund structures—blending traditional equity and fixed-income allocations with limited crypto components—are also under development by specialty asset managers aiming to offer turnkey solutions for plan sponsors hesitant to fully embrace direct crypto line items.
Legislative Landscape: Bills and the SECURE Act 2.0
Bipartisan Crypto Inclusion Bills
In both the U.S. House and Senate, bipartisan legislation has resurfaced in 2025 proposing to explicitly authorize retirement plan fiduciaries to include digital assets. The Blockchain Association and Chamber of Digital Commerce have endorsed versions of this bill since 2023, underscoring its regulatory consistency and potential to codify crypto’s place in ERISA-governed plans.
SECURE Act 2.0 Enhancements
The SECURE Act 2.0, enacted in late 2022, made sweeping changes to retirement policy, including easier rollovers, higher catch-up contributions, and expanded annuity options. Although not directly addressing crypto, SECURE 2.0’s modernization of plan mechanics and increased portability may indirectly facilitate future crypto inclusion by lowering technical hurdles for plan updates and participant elections.
Market Impact and Investor Perspective
Potential Demand Surge
U.S. 401(k) plans manage approximately $8.9 trillion in assets as of early 2025. Even a modest 1% allocation to Bitcoin across this universe could represent nearly $89 billion of demand, a figure market analysts warn could drive significant price volatility—or upside—in digital asset markets. Such dynamics align with anecdotal projections from hedge fund managers and crypto-focused asset allocators anticipating institutional inflows.
Investor Education and Risk Mitigation
Financial advisors are ramping up educational efforts around crypto’s characteristics, stress-testing portfolio impacts under extreme market swings, and clarifying tax treatment of digital asset gains within retirement accounts. Model portfolios circulated by advisory firms typically cap crypto exposure and advocate for ongoing monitoring, periodic rebalancing, and utilization of dollar-cost averaging to mitigate timing risks.
Looking Ahead: The Future of Crypto in Retirement Plans
With the DOL’s neutral stance reinstated, the door is open for incremental progress:
- Plan Sponsor Pilots: Expect large employers and recordkeepers to launch pilot programs with limited crypto line items, monitoring participant usage and operational workflows.
- Regulatory Clarifications: The DOL or SEC may issue additional FAQs or interpretive guidance to address custody standards, valuation methodologies, and plan audit protocols for crypto assets.
- Expansion of Product Ecosystem: Asset managers will develop a wider array of turnkey crypto solutions—ranging from pooled funds to separately managed accounts—that align with ERISA fiduciary standards.
- Potential Legislative Codification: Passage of explicit ERISA amendments could cement crypto’s inclusion in retirement plans, reducing legal uncertainty for fiduciaries.
These developments promise to shift crypto from a niche alternative to a supplementary asset within diversified retirement strategies—albeit with prudent guardrails to protect long-term savers.
Conclusion
The DOL’s May 28, 2025, decision to rescind the Biden-era “extreme care” guidance marks a watershed moment for digital asset integration in U.S. retirement plans. By reestablishing a neutral, principles-based framework, the Department has empowered fiduciaries to independently evaluate the merits of crypto offerings—balancing potential growth opportunities against fiduciary responsibilities. While widespread adoption will evolve gradually, driven by pilot programs, regulatory clarifications, and legislative action, the stage is set for a new era in which cryptocurrencies can play a measured, yet meaningful, role in long-term retirement portfolios. As plan sponsors, asset managers, and legislative bodies continue to refine the operational, legal, and educational infrastructure, retirement savers may ultimately gain access to a broader spectrum of investment choices—potentially enhancing diversification and return profiles in an increasingly digital financial landscape.
