Trump Boosts Crypto in 401(k)s by Axing Biden-Era Guidance (1)

The Trump administration is rescinding 2022 US Labor Department guidance that discouraged workplace 401(k) cryptocurrency investing.

The Biden-era guidance cautioned companies to exercise “extreme care” before adding crypto to their employees’ investment menus. That stance departed from the neutral approach the DOL’s Employee Benefits Security Administration is required to take by law, the agency said in a statement Wednesday.

The 2022 guidance threatened an “investigative program” aimed at plan sponsors that offered workers crypto either through plan menus or self-directed brokerage windows. It chilled emerging interest in a crypto exchange market that had attracted some 401(k) providers including Fidelity.

The Trump administration’s reversal could reignite interest, although Wall Street’s appetite for alternative investments in 401(k)s has waned.

The administration has signaled closer ties to alternative assets more broadly, reportedly considering a directive that would allow 401(k)s to access the private equity markets.

Moving forward, the department will neither endorse nor disapprove of specific investment options, according to the statement.

“The Biden administration’s department of labor made a choice to put their thumb on the scale,” said Secretary of Labor Lori Chavez-DeRemer in a statement. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats.”

Rare Assets

Crypto in 401(k)s is rare. There were a total of 69 digital coin-based investment options available to 401(k) investors either through their direct investment menus or brokerage windows, according to a 2024 Government Accountability Office report. Fewer than 1% of defined-contribution plans offer crypto investing at all, the report found.

Critics of digital assets in 401(k)s say retirement savings should be reserved for long-term stable investments that aren’t as susceptible to market pressures. The crypto industry insists they’re leveling the playing field by giving everyday investors a chance to get in early on a lucrative market.

The nation’s first crypto 401(k) recordkeeper, ForUsAll Inc., lost its bid to toss out the Biden guidance in 2023 after a judge found that vacating it wouldn’t revive the company’s business.

Trump, once a crypto critic himself, has since embraced crypto investing, launching a $TRUMP meme coin of his own earlier this year. His administration has the ear of crypto lobbyists and has pushed the government to establish a digital asset stockpile.

Trump’s Securities and Exchange Commission Chair Paul Atkins is a known crypto advocate who has lauded a clear and more predictable regulatory framework for crypto-based exchanges. The agency’s approval of spot Bitcoin and Etherium exchanges was a major victory for the industry last year.

Trump Media, the parent company of the president’s social media venture, announced that it had penned deals with about 50 large investors to help raise capital it will use to create a “Bitcoin treasury,” deepening its ties to the industry.