Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—GAO reports limited federal control over crypto assets in 401(k) plans, (Jan 22, 2025)
Law Firms Mentioned:Hall Benefits Law
Organizations Mentioned:Employee Benefits Security Administration | U.S. Department of Labor
By Hall Benefits Law of Hall Benefits Law
The U.S. Government Accountability Office (GAO) recently released a report on crypto assets in 401(k) plans. The GAO found that the lack of federal oversight and data collected on these assets could leave workers solely responsible for monitoring their crypto investments.
According to the GAO, the U.S. Department of Labor (DOL) has limited data concerning crypto assets in 401(k) plans. However, the GAO's investment return analysis on these assets has led it to conclude that crypto has "uniquely high volatility." No standard analysis approach exists for predicting the future returns on crypto investments.
Furthermore, the DOL does not require fiduciaries to select and monitor crypto assets according to the fiduciary standards of the Employee Retirement Income Security Act (ERISA). As a result, workers who choose to invest in crypto assets are largely on their own in selecting and monitoring these investments.
Some firms providing services to retirement plans began to offer crypto as an option in 2022. DOL's Employee Benefits Security Administration (EBSA) also issued a compliance assistance release in 2022, cautioning employers to be careful about offering crypto investments in retirement plans governed by ERISA. EBSA also stated in its release that plan fiduciaries who oversee or allow crypto investment options in ERISA-governed retirement plans should be cognizant of how these offerings might conflict with their duties of prudence and loyalty under ERISA.
Currently, DOL has insufficient information to identify 401(k) plans that offer crypto as an investment option. This lack of data, when combined with the lack of federal regulatory oversight of crypto, translates into a lack of investor protections for crypto assets.
HBL has experience in all areas of benefits and employment law, offering a comprehensive solution to all your business benefits and HR/employment needs. We help ensure you are in compliance with the complex requirements of ERISA and the IRS code, as well as those laws that impact you and your employees. Together, we reduce your exposure to potential legal or financial penalties. Learn more by calling 470-571-1007.
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