The U.S. Department of Labor (DOL) recently issued Compliance Assistance Release No. 2025-01. This release rescinds the DOL's 2022 compliance assistance release concerning investments in cryptocurrency by 401(k) plan fiduciaries.
In its 2022 release, the DOL outlined its concerns about the prudence of 401(k) plan fiduciaries making cryptocurrency investments available to plan participants. The release cited various factors heightening the risk of offering cryptocurrency investments early in their development. Ultimately, the DOL urged fiduciaries to exercise "extreme care" in adding cryptocurrency investment options to their plans. DOL also reminded fiduciaries that it would investigate plans offering these options and take enforcement action against them as needed to protect plan participants.
DOL's new release points out that the "extreme care" standard cited in the 2022 release is not explicitly found in the Employee Retirement Income Security Act (ERISA) and is inconsistent with ordinary ERISA fiduciary principles. With this release, the DOL returned to its historical approach of maintaining a neutral stance on all types of investments and investment strategies. Through this approach, DOL advises fiduciaries to evaluate all investment types by considering applicable facts and circumstances before determining whether it is prudent to offer them as options for plan participants. This reasoning and guidance are likely applicable not only to cryptocurrencies but also to the full range of digital assets, including tokens, coins, and other crypto assets.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
