Fiduciaries versus FOMO: Department of Labor Releases 401(k) Cryptocurrency Guidance


“Not very unlike the experience of the man that built himself a palace of moon-beams, and when the moon set was surprised that his palace vanished with it.”
—Herman Melville, The Confidence-Man

Regulators may be nervous about workers staking their retirements on crypto. The United States Department Labor’s Employee Benefits Security Administration (the “DOL”) recently issued Compliance Assistance Release No. 2022-01 to provide official guidance on 401(k) plan investments in cryptocurrencies. Noting “serious concerns” with the growing number of firms marketing cryptocurrencies to participants as investment options for 401(k) plans, the DOL warns plan fiduciaries to proceed with extreme care and at their peril.

The DOL identifies what it considers several major risks:

A few quick thoughts and takeaways:

Employers should separately assess other business considerations regarding compensation issues, workforce morale, and management training to properly manage any questions on this subject. Employers should conduct any such assessment with an understanding of employees’ variable comprehension of retirement plans’ complexities and appreciation for their possible risks. 

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National Law Review, Volumess XII, Number 89