Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—A return to investment neutrality? DOL rescinds guidance discouraging plan fiduciaries from considering cryptocurrencies, (Jun 20, 2025)

Law Firms Mentioned:Mayer Brown

Organizations Mentioned:Mayer Brown, LLP

By Richard Nowak of Mayer Brown

On May 28, 2025, the US Department of Labor (the "Labor Department") issued Compliance Assistance Release No. 2025-01 (the "2025 Release"), memorializing the Labor Department's decision to rescind Compliance Release No. 2022-01 (the "2022 Release"), which had discouraged plan fiduciaries from offering cryptocurrencies in their 401(k) plans. The 2025 Release explained that, by rescinding the 2022 Release, the Labor Department was returning to its historical approach of taking a neutral standard toward particular investment types and strategies by "neither endorsing, or disapproving of, plan fiduciaries who conclude the inclusion of cryptocurrency in a plan's investment menu is appropriate."

History and Impact of the 2022 Release

When it was issued in March 2022, the 2022 Release created a stir within the benefits industry because the Labor Department emphasized it had "serious concerns" about the prudence of cryptocurrency investments, and warned plan fiduciaries to "exercise extreme care"—a standard not found in ERISA's statutory text—before considering offering cryptocurrencies in their plans. In addition, the 2022 Release suggested—contrary to existing Labor Department regulations—that plan fiduciaries needed to monitor the individual investments available to participants through a self-directed brokerage window. Specifically, the 2022 Release stated that the Labor Department was intending to investigate plans that offered cryptocurrency investments, and warned plan fiduciaries that they "should expect to be questioned about how they can square [offering cryptocurrency investments in a brokerage window] with their duties of prudence and loyalty."

Because it appeared the Labor Department was seeking to impose heightened fiduciary obligations on cryptocurrency investments through the 2022 Release, a plan recordkeeper brought a legal challenge to the 2022 Release under the Administrative Procedure Act ("APA"). Based in part on the Labor Department's representation in the lawsuit that the 2022 Release was merely non-binding sub-regulatory guidance that did not prohibit plan fiduciaries from offering cryptocurrency investments in their 401(k) plans, the US District Court for the District of Columbia ruled in August 2023 that the 2022 Release was not a final agency action (i.e., it did not have the force of law) subject to legal review under the APA. The district court dismissed the legal challenge and the 2022 Release remained in effect.

In its public statements, the Labor Department made clear that its objective in issuing the 2022 Release was to discourage plan fiduciaries from offering cryptocurrency investments in their 401(k) plans. For example, the Labor Department emphasized in its response to written questions from Congress following a June 2023 hearing that it had issued the 2022 Release to "alert plan fiduciaries to enforcement positions the Department is taking on issues of concern." The Labor Department also conceded, that despite the warning in the 2022 Release, it had not increased its investigative activity into brokerage windows.

Whenever a federal agency issues strongly worded guidance like the 2022 Release, those impacted by the guidance pay close attention. So even though the 2022 Release did not have the force of law or impose heightened fiduciary obligations, it supported the Labor Department's mission to limit the growth of cryptocurrency investments in 401(k) plans. For example, while the price of bitcoin is currently up more than 160% since the issuance of the 2022 Release and the market cap for cryptocurrencies now exceeds $3 trillion, the Government Accountability Office ("GAO") reported in November 2024 that cryptocurrency investments in 401(k) plans account for "substantially less than 1 percent of the 401(k) market, whether measured by plans, participants, or assets." In addition, the GAO noted that 401(k) plans were not offering cryptocurrency investments in their core plan lineups. Rather, cryptocurrency investments, to the extent available, were almost exclusively offered to participants through self-directed brokerage windows, along with the wide array of other non-designated investments (e.g., mutual funds, ETFs, stocks, bonds, CDs, etc.) available in those brokerage windows. Stated another way, the participants investing in cryptocurrencies were self-selecting those investments among the myriad available options in their plan's brokerage window.

The New Administration's Approach to Cryptocurrencies

It was not that surprising that the Labor Department under President Donald Trump rescinded the 2022 Release. Shortly after his inauguration, President Trump signed an executive order setting forth his administration's policy "to support the responsible growth and use of digital assets, blockchain technology, and related technologies across all sectors of the economy." Since that time, the US Securities and Exchange Commission ("SEC"), Commodity Futures Trading Commission ("CFTC"), and other federal agencies have voluntarily dismissed many of the pending enforcement actions targeting the cryptocurrency industry that were filed during the Biden administration. The SEC also formed a "Crypto Task Force" to establish a clear regulatory framework for cryptocurrencies, issued new guidance and commentary on a variety of cryptocurrency-related matters, and recently rescinded Staff Accounting Bulletin 121, which imposed cryptocurrency-specific requirements and made it difficult for banks and other financial institutions to provide cryptocurrency-custody services.

Although other federal agencies have taken proactive steps to promote cryptocurrency under the Trump Administration, the Labor Department under Secretary Lori Chavez-DeRemer has taken a more neutral approach. While the Labor Department rescinded the 2022 Release, the 2025 Release does not explicitly encourage or promote the inclusion of cryptocurrency investments in 401(k) plans. Rather, it emphasizes that, when plan fiduciaries are evaluating any particular investment, including cryptocurrency, they should consider "all relevant facts and circumstances" which, as the US Supreme Court explained in Fifth Third Bank v. Dudenhoeffer, "necessarily will be context specific."

Is There a Future for Cryptocurrencies in 401(k) Plans?

Looking forward, it is an open question whether cryptocurrency investments, including bitcoin, will become more prominent in 401(k) plans. While it is unlikely that 401(k) plans—for operational, structural, and other fiduciary considerations, including volatility—will offer direct investments in cryptocurrencies in their plan lineups in the near future, participants may continue to seek exposure to cryptocurrencies through self-directed brokerage windows, including by investing in the spot bitcoin ETPs, which have seen more than $85 billion in net inflows since they were approved by the SEC in January 2024. It also remains to be seen whether plans and asset managers will provide participants with exposure to cryptocurrencies by incorporating modest allocations to cryptocurrency investments in their blended or asset allocation funds, including target-date funds. Of course, if plan fiduciaries are considering offering an investment with an allocation or exposure to cryptocurrency, they should follow their established fiduciary processes to ensure they understand the characteristics of each such investment to determine whether they are in the best interest of the plan and its participants and contribute to an appropriate and diversified mix of investment options.

Will the Labor Department Continue on the Path to Investment Neutrality?

In the press release accompanying the 2025 Release, Labor Secretary Chavez-DeRemer emphasized that the Labor Department was "rolling back th[e] overreach" of the 2022 Release to "mak[e] it clear that investment decisions should be made by fiduciaries, not DC bureaucrats." While the 2025 Release focuses on cryptocurrency investments in 401(k) plans, will the Labor Department take a similarly neutral stance to other types of investments, including private equity and alternatives, lifetime income, and ESG?In late May 2025, the Department of Justice informed the US Court of Appeals for the Fifth Circuit in the pending challenge to President Joe Biden DOL's ESG Rule that the Labor Department would "engage in a new rulemaking on the subject of the challenged rule" as part of the Trump Administration's spring regulatory agenda. There have also been reports that President Trump is considering an executive order directing federal agencies, including the Labor Department, to study the inclusion of private funds in retirement plans.

Given these developments, we may learn soon whether the Labor Department's return to investment neutrality extends beyond cryptocurrencies. However, the more important question from a regulatory clarity perspective for the benefits industry is: "Will this neutrality extend beyond the current administration?" Only time will tell.

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Richard Nowak

Mayer Brown

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