The Trump administration has lifted restrictions on cryptocurrency in retirement plans, sparking debate over investor protection and fiduciary responsibility in the fast-evolving digital asset landscape.
In a dramatic shift from prior policy, the Trump administration has rescinded guidance issued under President Biden that urged retirement plan managers to exercise “extreme care” when considering cryptocurrency investments for 401(k) accounts.
The initial warning, released in 2022 by the Department of Labor under the Biden administration, cautioned that “cryptocurrencies are very different from typical retirement plan investments,” highlighting the difficulty even seasoned investors face in evaluating digital assets and distinguishing fact from hype.
On May 28, that stance was formally withdrawn. The Department of Labor announced that it would now take a neutral position, neither endorsing nor opposing the inclusion of digital currencies in retirement portfolios.
“The Biden administration’s Department of Labor made a choice to put their thumb on the scale,” said Labor Secretary Lori Chavez-Deremer. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.”
Despite the regulatory shift, experts suggest the move will not unleash a flood of crypto options in the more than 715,000 401(k) retirement plans across the U.S., which collectively held about $8.9 trillion in assets by the end of 2024.
“Marketers have described crypto as a diversifier, currency hedge, inflation hedge and a safe haven. So far, it hasn’t lived up to those billings,” said Bryan Armour, director of passive strategies research for North America at Morningstar. “Crypto tends to tank when stocks drop. That said, it has paid off for investors that could stick through the tough times.”
Fidelity, a major 401(k) provider, introduced a digital asset account in 2022, allowing participants to allocate a portion of their retirement savings to bitcoin. However, this effort has been largely eclipsed by the introduction of crypto exchange-traded funds (ETFs), which offer more accessible exposure to digital assets.
Ali Khawar, a former deputy assistant secretary at the Labor Department during Biden’s tenure, warned that the reversal leaves employers with greater risk. “If they don’t do their due diligence correctly, when this volatile asset class takes its next dip, they’re going to be exposed to lawsuits from savers who rightly wonder whether they should have been given this option in the first place,” Khawar said.
The Biden-era guidance had stopped short of banning crypto from retirement plans but had strongly urged fiduciaries to consider the risks—highlighting the threats of fraud, theft, and loss.
Outside the retirement sector, however, crypto has continued to expand its reach. In 2024, financial giants like BlackRock and Fidelity launched spot bitcoin ETFs, attracting $126 billion in assets and returning 123% since their debut. Spot Ethereum ETFs soon followed, though with more modest investor interest.
These ETFs are accessible through self-directed brokerage windows in some 401(k) plans — a feature present in about 26% of such plans, typically in larger companies. Investments made through these windows fall outside the fiduciary obligations of employers.
A Government Accountability Office study from November counted nearly 70 crypto-related investment options potentially available to 401(k) participants. Morningstar reports that more than 70 additional crypto fund filings are currently awaiting approval, ranging from Solana to Dogecoin.
“Whether there is investor demand for this long menu of crypto ETFs is another story,” said Armour.
Still, most experts remain skeptical. “Unlike stocks or bonds, crypto isn’t backed by earnings, cash flow or expected future returns,” said Dustin Suttle, a certified financial planner based in Scottsdale, Arizona. “Its value hinges entirely on supply and demand, which makes it especially vulnerable to hype cycles and sentiment shifts.”
The Trump administration’s crypto enthusiasm was evident at the recent Bitcoin 2025 conference in Las Vegas, where Vice President JD Vance delivered the keynote address. “Crypto is a hedge against bad policymaking from Washington,” Vance said, “no matter what party’s in control.”
Meanwhile, ethical concerns surrounding Trump’s personal involvement in the crypto industry continue to mount. Critics note he is promoting digital currencies while appointing regulators who are simultaneously relaxing enforcement, raising conflict of interest questions.
Yet, financial advisors say the latest policy move is unlikely to change much on the ground.
“This DOL shift may open the door procedurally — it shouldn’t be perceived as lowering the bar,” said Emily Jaffe, president of OFC Wealth Management. “Most prudent fiduciaries I know are still keeping that door closed.”
