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Trump Administration Rescinds Guidance on Cryptocurrency in 401(k) Plans
The Trump Administration has taken a significant step by revoking the Biden-era directive from the Department of Labor (DOL) that had recommended caution for employers considering the inclusion of cryptocurrency investments in employees’ 401(k) retirement plans. This directive, issued in 2022, had warned fiduciaries of potential liability for losses associated with such investments made without thorough due diligence.
A New Direction on Digital Assets
In announcing the change, Labour Secretary Lori Chavez-DeRemer argued that the previous guidance represented an undue influence by the Biden Administration against digital asset investments. She stated, “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats.”
The DOL has now returned to a neutral stance, indicating it neither endorses nor opposes the inclusion of cryptocurrencies in 401(k) investment menus, thereby leaving the decision-making to fiduciaries.
Concerns from Critics
While some celebrate this policy shift, critics have raised alarms about the potential risks associated with investing retirement funds in cryptocurrencies, which are notorious for their volatility. Stephen Hall, a legal director at Better Markets, referred to the revocation as a dangerous move that prioritises crypto profits over the financial security of American workers. He emphasised that the original guidance was safeguarding millions from substantial losses during periods of extreme market instability.
Broader Context and Political Backing
This policy change aligns with an overarching wave of enthusiasm for cryptocurrencies from the Trump administration. Recently, Trump launched a $TRUMP meme coin, significantly boosting his financial portfolio. Vice President JD Vance recently affirmed at the Bitcoin 2025 Conference that under President Trump, the cryptocurrency sector now has a strong advocate in the White House.
In March, Trump further signalled support for cryptocurrencies by signing an executive order to create a Strategic Bitcoin Reserve, utilising BTC seized by law enforcement and planning to increase reserves through further cryptocurrency purchases. In the wake of these announcements, Bitcoin has surged by 60%, reaching a trading price of US$111,000 (approximately AU$172,820).
Conclusion
The rescinding of the Biden-era guidance on cryptocurrencies marks a pivotal moment for retirement investors, injecting a fresh level of risk and opportunity into the landscape. As fiduciaries navigate this evolving terrain, they will need to balance the allure of digital assets against the inherent risks involved, amid an administration eager to embrace the crypto revolution.
Related Articles:
- Bitcoin Breaks Away from Gold as Investors Pivot to Crypto, JPMorgan Finds
- Congress Could Seed a US Bitcoin Reserve Through Mining Incentives, Says VanEck
In summary, the new policy direction has the potential to reshape investment strategies for 401(k) plans, offering new possibilities while challenging traditional investment prudence amidst a highly volatile market.
