U.S. Department of Labor Rescinds Ban on Crypto in 401(k) Accounts

The U.S. Department of Labor (DoL) has rescinded a Biden-era guidance letter that effectively banned retirement plans from allowing crypto investments.

Under the Biden Administration, the DoL chose to put its “thumb on the scale” against cryptocurrency investments, newly appointed U.S. Secretary of Labor Lori Chavez-DeRemer said in a release.

“We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats,” said Chavez-DeRemer.

As the 401(k) plan overseer, the DoL’s 2022 guidance letter advised plan fiduciaries to exercise “extreme care” before adding crypto investment options, warning that they could be personally sued if they were found to have breached their fiduciary duty to act in the best interest of plan participants.

That amounted to a de facto ban on cryptocurrencies in the retirement savings accounts.

Speaking about stablecoin legislation on X today, Bitwise CIO Matt Hougan made a comment relevant to the DoL decision: “It's amazing what happens when regulators let you build actual businesses. The reason crypto rarely touched the ‘real world’ last cycle was that it was effectively illegal.”

About-face under Trump

The letter is the latest turnaround by the Trump Administration as it pursues policies more favorable to the cryptocurrency industry and seeks to wipe out the remains of Operation Choke Point 2.0, the government’s alleged actions to debank the cryptocurrency industry.

The Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) recently revoked guidance making “reputational risk” a criterion for banks to consider when doing business with companies.

In April, President Donald Trump signed into law a bill overturning the widely reviled IRS DeFi broker rule, which expanded the definition of broker to include decentralized crypto exchanges, self-custodial wallet providers, and even some software developers.

President Trump has also asked Congress to pass both a stablecoin regulatory bill and a broader crypto regulation bill before its August recess, and called for the U.S. to be the world leader in cryptocurrency and stablecoins.