President Donald Trump departs the White House on May 22, 2025. Trump is traveling to his Trump National Golf Club in Virginia where he is holding a dinner for the top investors in his $TRUMP cryptocurrency.
Kevin Dietsch | Getty Images News | Getty Images
The Trump administration on Wednesday relaxed barriers in 401(k) plans to buying cryptocurrency and related digital assets like NFTs and meme coins.
The Labor Department rescinded guidance put in place by the Biden-era Labor Department in 2022 that aimed to safeguard 401(k) investors from such digital assets.
At the time, the Biden labor officials cautioned employers to exercise “extreme care” before making crypto and related investments available to their workers. They cited “serious concerns” about the prudence of exposing investors’ retirement savings to crypto given “significant risks of fraud, theft, and loss.”
The Trump Labor Department has withdrawn that guidance in full.
‘Neither endorsing, nor disapproving of’ crypto
The agency said the standard of “extreme care” cited by the Biden administration is not found in the Employee Retirement Income Security Act, or ERISA.
“Prior to the 2022 release, the Department had usually articulated a neutral approach to particular investment types and strategies,” the Trump Labor Department said in a compliance assistance bulletin issued Wednesday.
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The department said that it is “neither endorsing, nor disapproving of” employers who decide that adding crypto to a 401(k) investment list is appropriate.
The Labor Department’s reasoning extends to cryptocurrencies and “a wide range” of digital assets like “tokens, coins, crypto assets, and any derivatives thereof,” it said.
Knut Rostad, president of the Institute for the Fiduciary Standard, an advocacy group, called the Trump administration’s move a “big mistake.”
“As a huge general rule, crypto doesn’t belong in a 401(k), period, end of sentence,” he said.
Rescinding the guidance “sends the wrong message by eliminating a yellow caution light and putting in place a green light” for employers and 401(k) investors to use crypto, Rostad said.
The move comes at a time when President Trump has launched a $TRUMP meme coin that’s added billions of dollars in paper wealth to his net worth and led Democratic senators to call for an ethics probe.
President Trump has pledged to make the U.S. the “crypto capital of the world.”
What the shift means for 401(k) investors
Some observers will likely view the Labor Department move as an olive branch to the pro-crypto crowd, signaling to employers that they can add digital assets to their 401(k) lineups at will and without consequence, said Philip Chao, a certified financial planner and retirement plan investment consultant.
“That may be the intended message,” said Chao, the founder of Experiential Wealth in Cabin John, Maryland. But he added, “I think it’s the wrong message.”
ERISA bestows a fiduciary duty on employers and company officials overseeing their 401(k) investments. At a high level, that legal responsibility means employers must put the best interests of 401(k) investors first and act prudently when choosing which investments to offer (or not offer).
That duty still exists — meaning it’s not a given employers will rush to offer crypto. Doing so might risk being sued by 401(k) investors in the future if their crypto investment goes belly up, Chao said.
In this sense, the Labor Department’s move is “not necessarily controversial,” he said.
“In reality, it’s saying we should treat crypto like any other asset,” Chao said.
There was some pushback against the Biden-era guidance among retirement plan advisors at the time it was issued because it seemed to single out a specific asset class. However, he understands the rationale.
“Crypto is such a new thing and there’s no regulation or protection, even a reasonable understanding of it,” Chao said. “And there still isn’t enough.”
Stephen Hall, legal director and securities specialist at Better Markets, an advocacy group for financial reform, believes the Biden-era guidance likely saved millions of investors from “grievous losses” when crypto prices plunged during the “Crypto Winter” of late 2022.
“During that time, the collapse of Do Kwon’s scam stablecoin project Terra Luna, and the bankruptcies of FTX, Celsius, Voyager Digital and BlockFi created a domino effect, sending crypto prices crashing and resulting in billions of dollars of customer funds frozen as courts sorted through the wreckage,” Hall said in an e-mailed statement.
