Senate Democrats last week issued a letter calling on the Department of Labor (DOL) to reinstate its guidance on cryptocurrencies in 401(k) plans.
The letter, addressed to DOL Secretary Lori Chavez-DeRemer and written by Sens. Richard J. Durbin (D-IL), Elizabeth Warren (D-MA), Tina Smith (D-MN), and Chris Van Hollen (D-MD), warned over the “significant risks and challenges” in offering the digital asset in retirement plans, including “fraud, theft, and loss” to Americans’ 401(k) accounts.
Senate Democrats added that due to its volatile nature, along with the “illicit finance that cryptocurrency facilitates,” such investments can be risky and unstable to workers’ long-term savings. The letter referenced a study conducted by blockchain analysis firm Chainanalysis, in which it found that illicit crypto activity amounted to at least $40 billion in 2024.
It also referenced that impacts of President Donald Trump’s “Liberation Day” tariffs, which plunged the value of Bitcoin by 10%.
“Thus, we strongly urge you to reinstate this guidance to ensure retirement security for millions of hardworking Americans,” Senate Democrats wrote.
The letter comes just weeks after the Employee Benefit Security Administration (EBSA) rescinded a 2022 compliance release that previously discouraged fiduciaries from offering crypto options, including tokens, coins, crypto assets, and any derivatives thereof, in 401(k) plans. That guidance had previously directed plan fiduciaries to exercise “extreme care” before adding the digital asset to retirement plan investment menus.
In her announcement rescinding the guidance, Chavez-DeRemer described the previous administration’s direction as governmental overreach, and added that investment decisions should be made by fiduciaries instead of federal regulators.
“The Biden administration’s department of labor made a choice to put their thumb on the scale,” said Chavez-DeRemer “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats.”
In withdrawing the 2022 guidance, the department said it reasserts a “neutral stance” on cryptocurrencies in 401(k) plans—one in which it is “neither endorsing, nor disapproving of” the assets in investment menus.
The action follows President Trump’s executive order that established a Presidential Working Group on Digital Asset Markets, aimed at strengthening U.S. leadership in digital finance. The executive order directed departments and agencies to identify and make recommendations towards regulations affecting the digital assets sector, including whether such regulations should be rescinded or modified.
SEE ALSO:
SEC Pulls Back 14 Proposed Rules from Prior Administration
EBSA Rescinds Guidance Warning Against Cryptocurrency in 401(k)s
Better Markets Rips DOL Decision to Rescind 2022 Crypto Guidance
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.