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Crypto in 401(k) Plans

On March 8, 2022, President Biden released an Executive Order on Ensuring Responsible Development of Digital Assets. On March 9, 2022, the DOL published Compliance Release No. 2022-01 entitled “401(k) Investments in Cryptocurrencies.

The DOL has concerns with cryptocurrencies, including their speculative nature and volatility, the reliability of valuation data, vulnerability to hackers, lack of adequate disclosures to permit informed decision-making, and the changing regulatory environment.

The guidance states:

DOL expects to conduct an investigative program aimed at plans that offer participant investments in cryptocurrencies and related products, and to take appropriate action to protect the interests of plan participants and beneficiaries with respect to these investments. The plan fiduciaries responsible for overseeing such investment options or allowing such investments through brokerage windows should expect to be questioned about how they can square their actions with the duties of prudence and loyalty in light of the risks described above.

Guidance appears to cover a broad array of digital assets. It is unclear whether or how the guidance applies to cryptocurrencies held as part of an asset allocation or target date fund.

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