John E. Chapman Chief Executive OfficerAt Clearwater Capital Partners, we believe in empowering our clients with clear, actionable insights—especially when the regulatory environment changes. That’s why we’re taking a moment to discuss the Department of Labor’s (DOL) recent decision to rescind its 2022 guidance on cryptocurrency investments in 401(k) plans.
In March 2022, the DOL issued guidance urging plan fiduciaries to exercise “extreme care” before adding cryptocurrency options to 401(k) investment menus. The agency expressed serious concerns about the prudence of exposing retirement plan participants to the volatility and regulatory uncertainty of digital assets. Fiduciaries were warned that offering crypto options could trigger scrutiny and require them to justify their decisions under ERISA’s strict standards of prudence and loyalty.
Fast forward to May 28, 2025: The DOL rescinded this guidance, officially returning to a neutral stance. The agency made it clear that it “neither endorses nor disapproves” of plan fiduciaries including cryptocurrency in plan investment menus. This move is intended to restore the DOL’s historically neutral, principle-based approach to fiduciary investment decisions.
What Does This Mean for Plan Sponsors?
With the rescission, the DOL is putting the responsibility squarely back on plan fiduciaries. You are now free to consider cryptocurrency as an investment option, but with that freedom comes the enduring obligation to act prudently and in the best interests of plan participants. The DOL’s action does not mean that cryptocurrency is now a “safe” or recommended choice; it simply means that fiduciaries must evaluate it as they would any other investment option.
It’s essential to note that, as a practical matter, cryptocurrency is not a mainstream or widely supported investment option in 401(k) plans today. Most major recordkeepers do not offer direct cryptocurrency options due to fiduciary liability concerns, volatility, a lack of long-term track records, and limited demand to date. While there has been some movement in the market, the vast majority of retirement plans continue to exclude cryptocurrency from their core investment lineups.
Key Considerations for Employers and CHROs
- Fiduciary Duty Remains Paramount
- The rescission does not change your fundamental responsibilities under ERISA. Any decision to include cryptocurrency must be made with the same rigor and due diligence applied to all other investment options.
- Volatility and Risk
- Cryptocurrencies are known for their high volatility. Plan participants may be drawn to the potential for high returns, but they must also understand the risk of significant losses, especially those nearing retirement.
- Education is Essential
- If you are considering adding crypto options, robust participant education is critical. Employees need to understand the speculative nature of these investments and how they fit (or don’t fit) within a diversified retirement strategy.
- Operational and Regulatory Uncertainty
- The regulatory landscape for digital assets remains uncertain. Plan sponsors must stay informed about evolving regulations and ensure that any crypto offering is operationally sound and compliant.
Our Perspective at Clearwater Capital Partners
At Clearwater, we take a measured approach to innovation. While we recognize the growing interest in digital assets, we continue to advise caution. Cryptocurrency may be appropriate for some investors, but it should only be included in a 401(k) plan after thorough consideration and with clear communication about the risks involved.
We are here to support you as you navigate these changes. Our team of accredited retirement plan specialists is ready to help you assess the suitability of cryptocurrency for your plan and ensure that your fiduciary process remains robust and defensible.
In Summary
The DOL’s rescission of its 2022 guidance is a notable shift, but it does not change the fundamentals of fiduciary responsibility. As always, we encourage you to approach investment decisions with prudence, transparency, and a focus on the long-term interests of your employees.
If you have questions about cryptocurrency or any other aspect of your retirement plan, please don’t hesitate to reach out. We’re here to help you make informed decisions that align with your organization’s goals and values.
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