Trump Removed Crypto Warnings from Retirement Plans. Will It Affect 401(k)s?

Business|Trump Removed Crypto Warnings From Retirement Plans. Will That Affect 401(k)s?

In 2022, the Biden administration’s retirement plan regulators placed a warning sign on cryptocurrencies, urging plan overseers to exercise “extreme care” before making digital coins available inside 401(k) plans.

“Cryptocurrencies are very different from typical retirement plan investments,” the Labor Department noted at the time, “and it can be extraordinarily difficult, even for expert investors, to evaluate these assets and separate the facts from the hype.”

The Trump administration’s regulators have decided to rescind this guidance.

The Labor Department, which oversees retirement plans, said on May 28 that it would adopt a neutral stance toward crypto, neither endorsing nor disapproving of plan managers who decide to include digital assets on 401(k) investment menus.

“The Biden administration’s Department of Labor made a choice to put their thumb on the scale,” said Lori Chavez-DeRemer, the labor secretary. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.”

The shift is not surprising given the Trump administration’s enthusiastic embrace of the crypto industry, even if President Trump and his family’s crypto dealings have raised ethical questions with little precedent in presidential history.

But the reversal is not expected to set off a rush to load crypto alternatives inside the more than 715,000 401(k) retirement plans, which held about $8.9 trillion in assets at year’s end, according to the Investment Company Institute. Retirement plan administrators — who must act solely in the best interest of the participating employees — are still responsible for choosing prudent investment options. Many fear being sued for far more conservative choices than crypto, plan experts say, and so far, the appearance of digital assets inside 401(k)s has been minimal.