U.S. Relaxes Cryptocurrency Investment Restrictions for 401(k) Retirement Accounts
The U.S. Department of Labor (DOL) has reversed its 2022 guidance that discouraged the inclusion of cryptocurrencies in 401(k) retirement plans. This latest move signifies a shift towards a neutral stance, potentially allowing crypto assets to be included in retirement investments.
Announced on May 28, 2025, the DOL's decision revokes a warning issued during the Biden Administration, which advocated for employers to exercise caution due to concerns about fraud, theft, and loss in digital assets like Bitcoin and other crypto assets.
According to a recent Bloomberg report, the DOL's new guideline places responsibility on plan fiduciaries to decide on the suitability of investment options, therefore introducing room for private equity, private credit, and other non-public assets in retirement accounts.
The change in policy comes at a time when 401(k) assets reportedly amounted to $8.9 trillion as of December 2024 data. Proponents celebrate this development as a step towards increased diversification, as the addition of alternative investments—previously restricted to wealthy investors—could potentially boost returns for the average worker.
One example of this gained momentum is digital assets like Bitcoin, which have attracted institutional interest. The new policy shift could pave the way for broad, risk-managed adoption of cryptocurrencies in mainstream portfolios.
However, critics caution against potential risks, such as increased volatility in the crypto markets. It's important to note that, historically, the Department of Labor's regulations—as per the Employee Retirement Income Security Act (ERISA)—demand prudence, loyalty, and diversification in investment decisions.
Some observers perceive the DOL's move as an olive branch to the crypto community, aligning with the pro-crypto stance of the Trump administration. As plan fiduciaries navigate this new landscape, the inclusion of alternative assets in 401(k) plans could redefine retirement investing, balancing opportunity with significant risks.
The DOL's decision in May 2025 allows for the potential inclusion of cryptocurrencies like Bitcoin in retirement investments, which could boost returns for the average worker and redefine retirement investing. This shift may also open up opportunities for investments in DeFi, a sector within the finance industry. However, it's crucial for plan fiduciaries to exercise prudence when deciding on the suitability of such investments, as the risks associated with digital assets, such as increased volatility, remain a concern.
%20Retirement%20Accounts){kind=link}