US Labor Department Updates Crypto Policy in 401(k) Plans
The U.S. Department of Labor has reversed its earlier guidance that discouraged retirement managers from including cryptocurrency in 401(k) plans. This marks another agency stepping back from limitations on digital assets. In 2022, the agency advised managers to be cautious when considering crypto, but now, the decision has been placed in the hands of fiduciaries, according to U.S. Secretary of Labor Lori Chavez-DeRemer. She criticized previous administrative actions for overreach. Following a broader trend, this reversal aligns with the current administration's more open approach to digital assets, appointing officials supportive of crypto. The previous government was more cautious about the crypto industry. Similar shifts have been observed in other agencies, with the FDIC reversing its standards and the Federal Reserve retracting earlier discouragements. This change potentially opens the door wider for crypto inclusion in conservative investment strategies like 401(k) plans.
FAQ
❓ What does the change in guidance mean for 401(k) plans?
It allows fiduciaries to make decisions on including crypto without interference from the Labor Department.
❓ Why was the previous guidance issued?
The 2022 guidance was issued due to concerns over high returns and potential risks associated with cryptocurrency investments.