The United States Department of Labor’s Employee Benefits Security Administration has shifted its stance on cryptocurrency investments in 401(k) retirement plans. In a recent announcement, the body rescinded a 2022 guidance that warned plan fiduciaries against including crypto assets in their investment portfolios.
For context, plan fiduciaries or trustees are individuals who oversee the management of a retirement or health plan. These individuals have the power to make key decisions about the assets and investments in their custody. They must also act in the best interests of the plan’s participants and beneficiaries, prioritizing their needs above all else.
Based on the previous guidance, these individuals were advised to exercise extreme caution before adding cryptocurrency to their investment portfolios. While the directive did not prohibit them from making such decisions, it was perceived as deviating from the department’s long-held principles of fiduciary decision-making, as outlined in the Employee Retirement Income Security Act.
The Department of Labor added that its decision to drop the 2022 guidance reaffirms its neutral stance on crypto investments, thereby empowering fiduciaries to make informed decisions based on their assessments of what is in the best interest of their plan participants without fear of external pressures.
A New Administration in Power
The 2022 compliance directive was released under the administration of Joe Biden, a tenure that was unfavorable to the crypto industry. U.S. Secretary of Labor Lori Chavez-DeRemer stated:
“The Biden administration’s Department of Labor made a choice to put their thumb on the scale. We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.”
Biden’s approach to crypto regulation has been more cautious. Meanwhile, Trump, during his Presidential campaign, promised a more crypto-friendly administration.
Some of his promises included making America the world’s Bitcoin capital and establishing a strategic Bitcoin reserve. It also included replacing SEC Chair Gary Gensler with a crypto-friendly leader and pardoning Silk Road founder Ross Ulbricht.
Trump Fulfils Crypto Promises
Following his inauguration, Trump started making good on his crypto pledges early in his presidency. For instance, he fired Gary Gensler and appointed crypto-friendly Paul Atkins as the new head of the U.S. SEC.
In January, Donald Trump issued an executive order to designate crypto as a national priority. Later that month, he granted clemency to the founder of the Silk Road.
