Under former President Joe Biden, the U.S. Department of Labor (DOL) issued a warning to fiduciaries in 2022 about the potential hazards of adding a cryptocurrency option to their 401(k) plans. However, in May 2025, the DOL abruptly rescinded that guidance. In response, four ranking Democratic members of the Senate are urging DOL Secretary Lori Chavez-DeRemer to recognize the "extremely volatile" nature of cryptocurrency and its unsuitability as a retirement investment tool.
According to the four Senators — Senate Democratic Whip Dick Durbin (D-IL), Ranking Member of the Senate Judiciary Committee; Senator Elizabeth Warren (D-MA), Ranking Member of the Senate Banking Committee; Senator Tina Smith (D-MN); and Senator Chris Van Hollen (D-MD) — the DOL's previous warnings about the risks and instability of cryptocurrency were not unwarranted. In that guidance, the DOL recommended that plan fiduciaries "exercise extreme care" before considering a cryptocurrency investment option for plan participants. As the Senators pointed out, the guidance came after the DOL found "significant risks of fraud, theft, and loss" when cryptocurrencies were part of a retirement plan. The Senators urged the DOL to reinstate the previous administration's guidance on the issue to protect the retirement savings of American workers.
One example of the obvious volatility of cryptocurrency is the historical rollercoaster performance of Bitcoin, one of its more popular forms. In the last five years, Bitcoin has swung from less than $17,000 to more than $111,000. President Trump's April "Liberation Day" tariffs caused Bitcoin to plunge a whopping 10%. As the on and off trade wars continue under the current administration, the Senators concluded that the instability of Bitcoin and other cryptocurrencies is likely to continue.
In rolling back the cryptocurrency guidance, DOL Secretary Chavez-DeRemer reinforced the agency's desire to take a "neutral" stance on the issue, thus allowing plan fiduciaries — not federal bureaucrats — to make individual decisions about the appropriateness of including a cryptocurrency option in the plan.
However, the Senators were quick to point out that tax-advantaged 401(k) plans are critical to the retirement of millions of Americans. Therefore, plan fiduciaries are required under federal law to exercise prudence and due care in choosing investment options for their plans, as well as those that are in the best interests of plan participants. The Senators likened including cryptocurrency in 401(k) plans to giving retirement service providers "the green light to include a volatile asset in their plans, and strip[s] guardrails against risk in retirement investment products."
The DOL's rescission of the cryptocurrency guidance aligns with President Trump's vow to make the U.S. the "crypto capital of the planet." The President's social media company, Trump Media and Technology Group, committed to raising $2.5 billion to invest in Bitcoin. Likewise, soon after his inauguration, the President tapped so-called "CryptoMom" Hester Pierce to lead a new Securities and Exchange Commission (SEC) task force to develop rules for digital assets. Pierce served as an SEC member during the previous Trump administration.
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