The U.S. Department of Labor has formally rescinded its 2022 guidance that warned 401k plan administrators to exercise “extreme care” before adding cryptocurrency investment options. The reversal, announced May 28, 2025, marks a significant policy shift that returns the agency to its historically neutral stance on investment types.
The original 2022 guidance had created uncertainty for plan administrators considering digital assets, with the DOL suggesting that offering cryptocurrency options could trigger federal investigations. Industry experts say the rescission removes regulatory overhang that had discouraged many employers from exploring crypto options for their retirement plans.
“The standard of ‘extreme care’ is not found in the Employee Retirement Income Security Act and differs from ordinary fiduciary principles,” the DOL stated in its new release. The agency emphasized it is “neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate.”
The change applies broadly to digital assets beyond just cryptocurrencies, including tokens, coins, crypto assets, and related derivatives. Plan fiduciaries must still follow standard ERISA requirements when evaluating any investment option, including demonstrating prudence and acting solely in participants’ interests.
Impact on Business Owners and High Earners
For business owners managing company 401k plans, the policy reversal provides clearer regulatory footing for considering cryptocurrency options. However, fiduciary responsibilities remain unchanged—plan administrators must still conduct thorough due diligence and document their decision-making process when adding any investment option.
Most participant exposure to cryptocurrency in 401k plans currently occurs through self-directed brokerage windows rather than core investment lineups, according to Government Accountability Office findings. These windows allow participants to invest in a broader range of assets alongside traditional mutual funds, ETFs, stocks, and bonds.
High-earning professionals with access to self-directed options may find expanded cryptocurrency investment opportunities within their employer plans. The tax advantages of holding digital assets within a 401k—where gains aren’t taxed until withdrawal—could be particularly appealing for those in higher tax brackets.
Fiduciary Standards Still Apply
While the “extreme care” language has been removed, ERISA’s core fiduciary duties remain in full effect. Plan administrators must evaluate cryptocurrency options using the same standards applied to any investment: considering factors like volatility, liquidity, fees, and whether the option serves participants’ best interests.
Legal experts recommend that plan committees maintain detailed documentation of their evaluation process, especially given cryptocurrency’s price volatility and evolving regulatory landscape. This includes assessing recordkeeping capabilities, custody arrangements, and ensuring participants understand the risks involved.
The rescission doesn’t change fundamental 401k rules or contribution limits, which remain at $23,500 for 2025 ($31,000 for those 50 and older with catch-up contributions). Digital assets held within 401k accounts follow standard retirement plan tax treatment—no current taxation on gains, with distributions taxed as ordinary income.
Broader Policy Context
The crypto guidance reversal aligns with other recent DOL policy changes, including moves to withdraw ESG-related investment rules from the previous administration. Industry observers view these shifts as part of a broader return to investment-type neutrality under current leadership.
The Investment Company Institute, representing major fund companies, praised the change as restoring “the traditional ERISA framework where fiduciaries, not regulators, decide whether to include” specific investment types. This approach puts decision-making authority back with plan administrators who know their participant demographics and investment needs.
For now, the regulatory uncertainty that had surrounded cryptocurrency in retirement plans has largely cleared, though plan fiduciaries remain responsible for making prudent investment decisions based on their specific circumstances and participant needs.
Source: 401(k) Plan Investments in “Cryptocurrencies” | U.S. Department of Labor