Welcome back to the Straight Arrow Chronicles, where we help trustees, fiduciaries, and family offices cut through the noise to make sound, prudent decisions in an ever-evolving financial world.

Today, we’re unpacking a major development that could reshape how retirement plans approach cryptocurrency: the U.S. Department of Labor’s (DOL) recent decision to rescind the Biden-era guidance that urged “extreme care” before including crypto in 401(k) investment menus.

What Changed?

On May 28, 2025, the DOL officially withdrew its 2022 guidance that had warned fiduciaries to exercise “extreme care” when considering cryptocurrency and related digital assets for 401(k) plans. The agency stated that the previous guidance deviated from its historically neutral, principles-based approach to fiduciary investment decisions under ERISA (Employee Retirement Income Security Act).

Labor Secretary Lori Chavez-DeRemer said, “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats”. The new stance neither endorses nor opposes crypto inclusion, effectively restoring the DOL’s traditional neutral position.

Why This Matters

The Biden-era guidance reflected serious concerns about crypto’s volatility, fraud risks, valuation challenges, and lack of regulation. It was intended to protect retirement savers from speculative investments that could jeopardize their nest eggs37 9.

Now, with the DOL stepping back, plan sponsors and fiduciaries have more flexibility to consider crypto options. This aligns with the Trump administration’s broader deregulatory approach, including easing restrictions on banks and a softer SEC enforcement stance under new leadership2 4 11 19.

However, the fiduciary duty to act prudently and in participants’ best interests remains unchanged. Plan sponsors must still carefully evaluate crypto’s risks and suitability before adding it to their investment menus1 6 9 10 17.

The Other Side of the Coin: Industry and Advocacy Perspectives

• Banking Industry: The American Bankers Association (ABA) applauded the rollback, arguing the 2022 guidance was issued without proper public comment and was legally flawed 3 5.
• Advocacy Groups: Organizations like the Institute for the Fiduciary Standard and Better Markets criticized the change, warning that removing cautionary language sends a risky message and could expose retirement savings to harm 6 7.
• Regulatory Environment: Beyond the DOL, the Department of Justice has shifted away from “regulation by prosecution,” focusing enforcement on criminal activity rather than regulatory violations by crypto firms. The SEC has softened its enforcement tone, dismissing some high-profile cases and seeking clearer rules through public engagement 2 10 11.

Volatility and Suitability: The Core Challenges

Cryptocurrency remains one of the most volatile asset classes. For example, Bitcoin’s annual volatility is roughly four to five times that of the S&P 500, and Ether’s volatility is even higher 8 18. While some investors welcome this risk for potential outsized returns, it conflicts with the conservative, long-term growth objectives typical of retirement portfolios.

Moreover, crypto lacks the extensive historical data fiduciaries rely on to assess investment suitability, making it difficult to confidently include crypto as a core option in 401(k) plans 9.

Practical Considerations for Fiduciaries and Plan Sponsors

If you’re considering crypto for your retirement plan menu, here are key points to keep in mind:

• Due Diligence Is Crucial: Conduct thorough risk assessments and document your decision-making process. Consider expert advice on digital assets and ERISA fiduciary standards1 9 10.
• Custody and Security: Partner with qualified custodians offering institutional-grade security and insurance to mitigate theft or loss risks 9 10.
• Participant Education: Ensure participants understand crypto’s risks and volatility. Transparency helps manage expectations and reduces potential liability 6 9.
• Investment Limits: Consider capping crypto allocations (e.g., 1–5%) to limit exposure and volatility impact on retirement portfolios9.
• Flexible Plan Design: Use self-directed brokerage windows or modular investment options that can be adjusted or removed if regulatory or market conditions change 6 9.

Political and Regulatory Uncertainty Ahead

While the current administration’s stance is permissive, upcoming midterm elections and the 2028 presidential election could bring changes. A Democratic-controlled Congress or administration might reinstate stricter guidance or impose new regulations on crypto in retirement plans 12 13 19.

This potential “regulatory whiplash” means fiduciaries should build flexibility into their plans and stay closely informed of political developments.

Final Thoughts

The DOL’s rollback of the “extreme care” guidance marks a pivotal moment for crypto in retirement investing. It opens the door for innovation and broader access but demands heightened prudence and vigilance.

Crypto is neither a panacea nor a pariah—it’s a complex, evolving asset class that requires fiduciaries to balance opportunity with risk carefully. For now, cautious experimentation, robust documentation, and clear communication with plan participants remain the best path forward.

At Straight Arrow Solutions, we’re here to help you navigate these changes with clarity and confidence. If you’re considering crypto in your plan or want to discuss fiduciary best practices, please reach out.

Stay sharp, stay informed, and keep your arrows straight.

Recommended Reading:

1. HR Dive, “DOL rescinds Biden-era warning against offering cryptocurrency in 401(k) plans,” May 28, 2025
2. Kiplinger, “Cryptocurrency May be Coming to Your 401(k) with Rules Change,” May 28, 2025
3. Cointelegraph, “Labor Department rescinds Biden-era guidance for crypto in 401(k) plans,” May 28, 2025
4. Bloomberg Law, “Trump Boosts Cryptocurrency in 401(k)s by Axing Biden Guidance,” May 28, 2025
5. American Bankers Association, “Labor Department rescinds guidance on crypto and 401(k)s,” May 28, 2025
6. The Daily Upside, “Want a Crypto 401(k)? The DOL Isn’t Standing in the Way Anymore,” May 29, 2025
7. Better Markets, “Better Markets Rips DOL Decision to Rescind 2022 Crypto Guidance,” May 28, 2025
8. Fidelity Digital Assets, “A Closer Look at Bitcoin’s Volatility,” May 1, 2024
9. U.S. Government Accountability Office (GAO), “Report Highlights Risks and Oversight Challenges of Crypto in 401(k)s,” Feb 11, 2025
10. PLANSPONSOR, “Enforcement Actions Spotlight Crypto Risks for Plan Fiduciaries,” Dec 21, 2023
11. Coincub, “U.S. Crypto Regulation 2025: Trends & Impact,” Mar 3, 2025
12. Elliptic, “2025 Regulatory outlook: It’s crunch time for the US Congress on crypto legislation,” Feb 25, 2025
13. CryptoRank, “Democrats Push to Amend GENIUS Act Due to Trump’s Crypto Ties,” May 23, 2025
14. Debevoise & Plimpton, “Stablecoin Bills Advance in Congress,” May 5, 2025
15. CNBC, “Trump administration axes Biden-era barrier for crypto in 401(k) plans,” May 28, 2025
16. NAPA Net, “Department of Labor Rescinds Crypto Guidance for 401(k) Plans,” May 28, 2025
17. PLANADVISER, “DOL Rescinds 2022 Cryptocurrency Guidance for 401(k) Plans,” May 28, 2025
18. Forbes, “How Volatile Is Bitcoin Compared To Other Assets,” Aug 16, 2024
19. Financial Tech Times, “From Crackdown to Integration: US Crypto Policy in 2025,” Apr 25, 2025
20. PLANSPONSOR, “DOL Resets Stance to ‘Neutral’ on Crypto Options in 401(k) Plans,” May 28, 2025