From Yahoo Finance: 2025-06-02 19:01:00

The U.S. Department of Labor has rescinded its 2022 guidance against including cryptocurrencies in 401(k) investment menus, opening up billions in retirement savings for digital asset investments. The move eliminates the “extreme care” standard imposed on plan fiduciaries and encourages evaluating crypto investments using standard principles.

Employers can now consider crypto options without heightened scrutiny, investment companies can develop crypto products, and workers may gain exposure to digital assets through employer-sponsored plans. The $7.4 trillion 401(k) market could see significant capital flows into cryptocurrencies with even modest allocations.

Potential benefits include diversification, exposure to high-growth assets, and professional oversight. However, risks include high volatility, regulatory uncertainty, limited performance history, and potential for losses. Fiduciaries face challenges like investment performance liability, participant education on crypto risks, and operational complexity.

401(k) plans are likely to offer Bitcoin and Ethereum ETFs, diversified crypto index funds, target-date funds with crypto allocations, and self-directed brokerage accounts with crypto access. The reversal reflects growing institutional acceptance of cryptocurrencies and the evolving regulatory landscape in financial markets.

Younger workers with longer time horizons could benefit from crypto exposure, while older participants approaching retirement should carefully consider crypto’s volatility and lack of income generation. The DOL’s neutral stance signals regulatory comfort with digital assets in traditional financial structures.

Implementation depends on plan sponsor decisions, investment provider product development, and participant education and adoption. Market development will likely focus on established cryptocurrencies through regulated investment vehicles as employers assess demand and fiduciary implications.

Read more: Your 401(k) Just Got A Bitcoin Upgrade