With a cryptocurrency-friendly Donald Trump in the White House, the U.S. Department of Labor’s Employee Benefits Security Administration this morning announced that it has rescinded a 2022 compliance release that previously discouraged fiduciaries from including cryptocurrency options in 401(k) retirement plans.
“We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats.”
Secretary of Labor Lori Chavez-DeRemer
The 2022 guidance directed plan fiduciaries to exercise “extreme care” before adding cryptocurrency to investment menus. In a press release today, EBSA said this language deviated from the requirements of the Employee Retirement Income Security Act and marked a departure from the department’s historically neutral, principled-based approach to fiduciary investment decisions.
“The Biden administration’s department of labor made a choice to put their thumb on the scale,” said U.S. 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 DC bureaucrats.”
By rescinding the 2022 guidance, the department reaffirms its neutral stance, neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate.
Shortly after taking office, President Trump on Jan. 23 signed an Executive Order establishing the Presidential Working Group on Digital Asset Markets to strengthen U.S. leadership in digital finance, which also directed departments and agencies with identifying and making recommendations to the Working Group on any regulations and other agency actions affecting the digital assets sector that should be rescinded or modified.
The Working Group is tasked with developing a Federal regulatory framework governing digital assets, including stablecoins, and evaluating the creation of a strategic national digital assets stockpile.
The Executive Order revoked the previous administration’s Digital Assets Executive Order and the Treasury Department’s Framework for International Engagement on Digital Assets which the Trump administration says suppressed innovation and undermined U.S. economic liberty and global leadership in digital finance.
“The growth of digital financial technology in America must remain unhindered by restrictive regulations or unnecessary government interference,” the EO stated.
Congress is also in on action to ease regulatory interference. On April 1, Sen. Tommy Tuberville (R-AL) and Rep. Byron Donalds (R-FL) reintroduced the Financial Freedom Act, which would legislation prohibiting the Department of Labor from “issuing a regulation or guidance that limits the type of investments that self-directed 401(k) account investors can choose through a brokerage window.”
Donalds and Tuberville originally introduced the legislation back in May 2022 as a direct response to the March 2022 DOL guidance discouraging the use of crypto in 401(k)s.
The House version of the bill was referred to the House Committee on Education and Workforce while the Senate version was referred to the Senate Committee on Health, Education, Labor and Pensions (HELP).
SEE ALSO:
• Trump Signs Executive Order Supporting Crypto
• New Data Shows Shift Toward Crypto Asset Diversification in IRAs
• Fidelity Rolls Out New Crypto IRA
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.