DOL Rescinds Crypto Guidance: Fiduciary Discretion Reaffirmed

On May 28, 2025, the U.S. Department of Labor’s Employee Benefits Security Administration (EBSA), under the Trump Administration, officially rescinded its 2022 compliance assistance bulletin, which had strongly cautioned fiduciaries against including cryptocurrency (crypto) investment options in 401(k) plans. The move signals a shift in regulatory posture and reasserts the discretion of plan fiduciaries to determine appropriate investment offerings without regulatory bias.

The DOL 2022 Guidance

In March 2022, under the Biden Administration, EBSA issued Compliance Assistance Release No. 2022-01, advising fiduciaries to exercise “extreme care” before offering cryptocurrency as an investment option in defined contribution plans. Citing concerns under the Employee Retirement Income Security Act of 1974 (ERISA), the guidance emphasized the fiduciary duty to act solely in the financial interests of plan participants and to exercise a high standard of professional care.

The 2022 guidance was based on the following concerns:

• Volatility: Cryptocurrencies were considered to be highly speculative, subject to extreme price fluctuations due to valuation uncertainties.

• Security Risks: Numerous incidents of theft, hacking, and fraud were cited as evidence of insufficient asset protection mechanisms being in place.

• Investor Sophistication: EBSA warned that the promise of outsized returns from cryptocurrency investments could attract unsophisticated investors with little understanding of the inherent risks.

• Custodial Complexity: Crypto assets are often not held in traditional custodial accounts and are vulnerable to being irretrievably lost due to password misuse or system failures.

• Regulatory Uncertainty: The evolving and often unclear legal landscape for crypto posed additional fiduciary and compliance risks.

The Rescission: A Policy Shift

In its recent announcement, the DOL clarified that the rescission of the 2022 guidance does not equate to either endorsement or disapproval of cryptocurrency investments within retirement plans. Instead, it emphasizes restoring neutrality in regulatory oversight, allowing fiduciaries to independently evaluate investment options and not rely solely on regulatory guidance in cases such as cryptocurrencies.

This shift aligns with broader efforts to reinforce fiduciary discretion under ERISA without unduly discouraging specific asset classes.

Legislative Context: The Financial Freedom Act

The policy change follows renewed legislative pressure to roll back the DOL 2022 guidance. In April, 2025 the Financial Freedom Act was re-introduced, which would prohibit the DOL from limiting the range or type of investments available to individuals managing their retirement accounts.  The proposed bill is intended to protect investor choice and prevent regulatory overreach in determining permissible retirement plan investments.

What This Means for Plan Fiduciaries

With the 2022 guidance rescinded, fiduciaries once again have greater latitude to assess whether cryptocurrency is an appropriate addition to a 401(k) plan’s investment menu. However, this increased discretion comes with continued responsibility and fiduciary risk. Under ERISA, fiduciaries must still:

• Act solely in the interest of plan participants.

• Thoroughly evaluate investment options based on risk, return, cost, liquidity and regulatory implications.

• Document decision-making processes in compliance with fiduciary standards.

Cryptocurrencies remain complex and evolving as an asset class. Fiduciaries should conduct comprehensive due diligence, including legal and operational risk assessments, before considering the inclusion of crypto in their plan’s fund line-up.

Conclusion

The Department of Labor’s decision to rescind its 2022 cryptocurrency guidance marks a significant pivot toward restoring fiduciary authority in 401(k) investment decisions. While it does not signal approval of cryptocurrency in retirement plans, it places a greater onus on plan fiduciaries to evaluate and understand the benefits and risks of these investments.  It reinforces the principle that fiduciaries are best positioned to make these investment determinations.

As the regulatory and market environment for digital assets continues to evolve, plan fiduciaries should continue to stay informed and maintain a rigorous, well-documented investment review process to uphold their ERISA fiduciary obligations.