Main Points:
- The U.S. Department of Labor has officially rescinded its 2022 guidance that urged retirement plan fiduciaries to exercise “extreme care” before adding cryptocurrency to 401(k) investment menus, restoring a neutral, principle-based approach under ERISA.
- Labor Secretary Lori Chavez-DeRemer characterized the prior Biden-era directive as bureaucratic overreach, emphasizing that investment decisions belong to fiduciaries, not D.C. officials.
- The policy shift aligns with a broader pro-crypto agenda under President Trump, including executive orders recognizing bitcoin as a reserve asset and high-profile endorsements of digital currencies.
- Industry experts predict gradual adoption by plan sponsors, with initial offerings likely to focus on indirect crypto exposures through funds or ETFs due to volatility and regulatory intricacies.
- Fiduciary obligations under the Employee Retirement Income Security Act remain unchanged; plan sponsors must still conduct rigorous risk assessments and act in participants’ best interests.
- Market impact was immediate: bitcoin prices surged above $110,000 amid optimism over the administration’s crypto-friendly stance.
1. Background: From Neutrality to “Extreme Care” and Back
Prior to 2022, the Department of Labor (DOL) maintained a historically neutral stance on the inclusion of specific asset classes—such as real estate or commodities—in 401(k) retirement plans, allowing fiduciaries broad discretion under the Employee Retirement Income Security Act (ERISA). However, on July 1, 2022, the DOL’s Employee Benefits Security Administration issued Compliance Assistance Release No. 2022-1, which directed plan fiduciaries to exercise “extreme care” before adding cryptocurrency options to their investment menus. This language, the first of its kind in the agency’s history, flagged cryptocurrencies as presenting “significant risks and challenges,” including susceptibility to fraud, theft, valuation issues, and participant comprehension hurdles.
The 2022 guidance diverged sharply from ERISA’s plain text, which requires fiduciaries to act prudently and solely in participants’ best interests but does not prescribe heightened scrutiny for specific asset classes. By implicitly stigmatizing digital assets, the guidance raised concerns among crypto advocates that retirement savers were being denied access to emerging financial technologies. Critics argued that moral hazard crept in when regulators effectively “thumbed the scale” against an entire asset category—an action viewed by many as overreach rather than a neutral application of fiduciary principles.
2. The Rescission: Restoring Fiduciary Discretion
On May 28, 2025, the DOL announced the formal rescission of the 2022 “extreme care” directive. Per Release Number 25-918-NAT, the agency clarified that the “extreme care” standard does not exist in ERISA’s statutory language and that fiduciaries possess the authority to determine the appropriateness of including cryptocurrencies in plan offerings. “The Biden administration’s Department of Labor made a choice to put their thumb on the scale,” stated Secretary of Labor Lori Chavez-DeRemer. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.”
By rescinding the 2022 guidance, the DOL reaffirmed its longstanding principled approach: neither endorsing nor disapproving of fiduciaries who include digital assets in their plans. The new compliance release stressed that plan sponsors must continue to satisfy ERISA’s fiduciary duties—conducting thorough due diligence, diversifying investments to minimize risk, and documenting decision-making processes—but may now evaluate cryptocurrencies on par with other speculative or alternative investments.
3. Policy Context: Trump Administration’s Pro-Crypto Agenda
The DOL’s decision forms part of a broader realignment of federal policy toward digital assets under President Donald Trump’s administration. Since taking office in January 2025, the administration has signaled an explicit embrace of cryptocurrency innovation. Vice President J.D. Vance headlined a major bitcoin conference in Miami, while Trump Media Group announced plans to invest $2.5 billion in bitcoin reserves. In April 2025, an executive order recognized bitcoin as a potential reserve asset for the U.S., and the White House appointed its first “crypto czar” to coordinate policy across agencies.
These initiatives contrast sharply with the prior administration’s cautious regulatory posture, which included Treasury Department advisories on cryptocurrency risks and the Securities and Exchange Commission’s litigation against unregistered digital asset issuers. The current administration asserts that fostering a supportive environment will spur domestic innovation, attract global digital asset businesses to U.S. jurisdiction, and strengthen the country’s financial competitiveness. The DOL’s policy reversal underscores this philosophy, repositioning retirement plans as potential vehicles for “responsible experimentation” with emerging technologies—provided fiduciaries prudently manage attendant risks.
4. Industry Reaction: Adoption Challenges and Opportunities
Plan sponsors and record-keepers reacted with measured enthusiasm. Large institutional providers—such as Fidelity, Vanguard, and Charles Schwab—have the infrastructure to integrate crypto-targeted funds or cryptocurrency-linked products relatively quickly. However, smaller plan administrators face technological, operational, and legal challenges including custody arrangements, valuation methodologies, participant education, and potential ERISA litigation risks. As a result, industry analysts predict a phased rollout, beginning with indirect exposures such as blockchain-focused ETFs or trust funds, before offering direct cryptocurrency investment options.
Retirement industry trade groups voiced both optimism and caution. The Plan Sponsor Council of America praised the DOL’s return to a principle-based approach but urged fiduciaries to “exercise prudence and engage in robust risk assessment” given crypto’s price volatility and evolving regulatory landscape. Meanwhile, advocates for crypto inclusion lamented lost time for savers who might have benefited from early adoption. Some financial advisors anticipate designing specialized target-date funds with modest crypto allocations (e.g., 1–5%) to balance growth potential with asset stability.
5. Fiduciary Considerations Under ERISA
Despite the newfound freedom, fiduciaries must still satisfy stringent ERISA obligations:
- Duty of Loyalty: Plan managers must prioritize participants’ interests, avoiding conflicts of interest or self-dealing when selecting crypto options.
- Duty of Prudence: Any investment menu changes require a thorough evaluation of risk-return profiles, including custody mechanisms, transaction fees, and cybersecurity safeguards.
- Diversification Requirement: While ERISA does not mandate specific asset allocations, fiduciaries must diversify plan assets to minimize risk of large losses, suggesting that crypto allocations remain small relative to total plan assets.
- Documentation and Oversight: Fiduciaries should document all analyses, vendor due diligence, and participant communications to demonstrate compliance and facilitate defense against potential litigation.
These duties underscore that, even in the absence of a directive to “be extremely careful,” plan sponsors must approach crypto inclusion with the same rigor applied to other alternative or speculative investments. Failure to do so could result in ERISA lawsuits alleging imprudent management.
6. Market Impact and Investor Perspective
The announcement sparked immediate market activity: bitcoin prices climbed from around $105,000 to over $110,000 within 24 hours of the DOL release, reflecting renewed optimism about institutional adoption and retirement inflows. Some analysts forecast that even a 0.1% allocation of defined-contribution plan assets—currently approximately $10 trillion in total—could translate into meaningful demand for digital assets, potentially supporting price appreciation and liquidity.
Retail investors, particularly younger savers who prioritize growth and technological innovation, may view the policy shift as validation of crypto’s legitimacy within mainstream finance. Conversely, retirement-focused advisors caution that digital assets remain highly volatile; past swings of 30–50% within weeks could imperil savers nearing retirement if allocations are not carefully managed. As a result, many advisors recommend “core-satellite” approaches, where crypto forms a small satellite position alongside traditional stocks, bonds, and real assets.
7. International Comparisons and Competitive Dynamics
Globally, several jurisdictions have already permitted retirement accounts to hold digital assets. In Canada, the Ontario Securities Commission authorized certain defined-contribution plans to include crypto-linked investment funds since 2023. Australia’s superannuation industry debated crypto allocations in late 2024, with some funds piloting small digital asset exposures. The DOL’s reversal positions the U.S. alongside these markets, potentially attracting global asset managers and fintech firms to establish retirement-focused crypto products in the U.S. market.
The policy change may also pressure competing jurisdictions like the European Union to reassess MiFID II and pension regulation frameworks, where digital asset inclusions face stringent licensing and disclosure requirements. U.S. retirement plan innovation could thus catalyze a broader re-evaluation of crypto’s role in long-term savings vehicles worldwide.
8. Looking Ahead: Regulatory and Legislative Considerations
While the DOL’s release removes one obstacle, federal and state regulatory uncertainties persist. The SEC continues to litigate over whether major cryptocurrencies qualify as securities, and the Commodity Futures Trading Commission maintains oversight of derivative and futures markets. Without clear statutory definitions, plan sponsors may remain cautious. Legislative efforts in Congress—such as the “Digital Assets in Retirement Act”—seek to codify crypto-friendly provisions within ERISA, but progress remains uncertain amid partisan divisions.
Moreover, cybersecurity and custody protocols will be critical. Absent robust, insured custody solutions akin to the FDIC for bank deposits, fiduciaries may hesitate to expose savers’ retirement funds to custodial failures or hacks. Industry consortia are exploring standardized custody frameworks and insurance products to address these gaps, but widespread implementation may take years.
Conclusion
The Trump administration’s rescission of the 2022 “extreme care” guidance marks a pivotal moment in the intersection of retirement planning and digital asset innovation. By restoring a neutral, principle-based approach, fiduciaries regain the autonomy to decide whether cryptocurrencies belong in their plan menus—subject, of course, to the unaltered rigors of ERISA’s fiduciary duties. While adoption is likely to be cautious and incremental, the door is now open for retirement savers to access digital asset growth potential through mainstream retirement vehicles. As regulatory clarity improves and custodial infrastructures mature, cryptocurrencies may evolve from niche offerings to recognized components of diversified retirement portfolios—ushering in a new era where blockchain technology and long-term savings strategies converge.
