U.S. Department of Labor Withdraws 2022 Crypto Guidance—What It Means for 401(k) Plan Fiduciaries

In the 2022 Release, the DOL expressed serious concerns about the prudence of a fiduciary’s decision to allow a 401(k) plan’s participants to direct investments in cryptocurrencies, or other products whose value is tied to cryptocurrencies, citing extreme volatility, valuation challenges, custodial and recordkeeping vulnerabilities, risks of fraud and theft, and an evolving regulatory landscape, where some assets could later be deemed unregistered securities. The DOL cautioned that it would scrutinize fiduciaries who allowed crypto exposure and expected them to justify how such decisions aligned with their duties of prudence and loyalty under the Employee Retirement Income Security Act of 1974 (ERISA). While the 2022 Release did not legally prohibit crypto as an investment option in 401(k) plans, in practice, the 2022 Release often served as a useful shield—allowing fiduciaries to decline participant interest in crypto without having to fully vet or justify that decision. Now, with the DOL’s withdrawal of the 2022 Release and sustained popular interest in crypto, plan fiduciaries should expect renewed inquiries from participants eager for access to digital asset investments through their retirement accounts.

Fiduciaries who consider including digital asset investments in the menu of investment alternatives available to participants under 401(k) plans must still satisfy ERISA’s core duties of prudence and loyalty. This involves assessing the prudence of a crypto-based investment vehicle based on all of the relevant facts and circumstances, including participant risk tolerance and retirement readiness, as well as understanding the volatile nature of crypto assets, the reliability of their valuation (and the related transaction fees) and the custody arrangements they require. Crypto remains a challenging asset class from a fiduciary perspective, particularly given its price instability, evolving regulatory status and absence of traditional investor protections, like FDIC or SIPC coverage. Moreover, as emphasized in the 2022 Release, fiduciaries cannot shift responsibility to plan participants by merely offering crypto as one option under a diverse investment line-up, such as through a self-directed brokerage account. Even in participant-directed plans, fiduciaries retain the obligation to evaluate the prudence of each investment and to ensure that imprudent options are not included in the plan’s investment line-up.

Crypto exposure can be structured in various ways. The most direct method is through investment in individual tokens, such as Bitcoin or Ethereum, but this typically requires the use of a self-directed brokerage window or a custom platform rather than inclusion in the plan’s core investment menu. Plan fiduciaries may also consider crypto exchange-traded products (ETPs), such as those currently available on Spot Bitcoin or Ethereum. Recently, there have also been a number of applications filed with the Securities and Exchange Commission to list ETPs or exchange-traded funds (ETFs) on other cryptocurrencies, such as Solana (SOL), Cardano (ADA), Polkadot (DOT), Ripple (XRP), Hedera (HBAR), Dogecoin (DOGE) and Litecoin (LTC), as well as ETFs on NFTs and Memecoins, but it remains to be seen how many will be approved. Another potential method to gain exposure to crypto is through equity in “digital asset treasury companies” (DATCs). These are public companies that adopt a corporate strategy of holding significant amounts of cryptocurrency, particularly Bitcoin, as primary treasury reserve assets. DATCs, such as Strategy (formerly MicroStrategy), allocate substantial portions of their capital to digital assets, often financing these acquisitions through equity or debt offerings.

Each of these investment types comes with its own regulatory, valuation and custodial considerations. Currently, however, there is limited infrastructure to support crypto exposure within 401(k) plans, particularly outside of self-directed brokerage windows. A small number of vendors, such as Fidelity and ForUsAll, offer crypto access to plans on their platforms, but usually only through structured platforms with allocation limits—often restricted to Bitcoin or, in some cases, Ethereum. The narrow range of offerings reflects both caution in light of continuing regulatory uncertainty and, perhaps, a lack of demand.

In short, the 2025 Release and the DOL’s change in position may prompt increased participant interest in the availability of crypto and other digital assets for investment under 401(k) plans. However, the 2025 Release does not on its face reduce the fiduciary duties or risks associated with including crypto in a 401(k) plan. For many plan fiduciaries, a cautious approach may remain the prudent approach. However, as the market and custody infrastructure and regulatory framework mature further, plan fiduciaries may determine to add crypto and other digital asset exposure to the investment options available under their retirement plans. Notably, legislative efforts are also underway to further liberalize the investment of crypto in 401(k) plans. Specifically, the Financial Freedom Act, as reintroduced in April 2025, would prohibit plan fiduciaries from limiting investment alternatives, including crypto, in self-directed brokerage windows.

If you are evaluating whether to offer cryptocurrency or other digital assets as an investment alternative under your 401(k) plan or other retirement plan or are addressing how to respond to participant inquiries, our team is available to advise on the legal and operational issues involved. Please contact your Pillsbury attorney or a member of our Executive Compensation & Benefits Team for additional information.