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The US has opened the door to Americans purchasing crypto tokens in their retirement accounts, underscoring how Donald Trump is taking a far more tolerant approach to digital assets than his predecessor Joe Biden.
The Department of Labor said on Wednesday it had rescinded previous guidance issued in 2022 for retirement plan managers and sponsors to exercise “extreme care before they consider adding a cryptocurrency option to a 401(k) plan’s investment menu,” referring to a widely used employer-sponsored vehicle for US pension savings.
The removal of the language concerning “extreme care” comes just a day after the Trump family media company said it would raise $2.5bn to buy bitcoin, and offers the latest sign of how the new administration is opening the floodgates to greater investment in cryptocurrencies.
Vice-president JD Vance is set to address a bitcoin conference in Las Vegas on Wednesday. Other senior US officials, and Trump associates and family members, are also attending the event.
The president has emphasised his eagerness to make the US the “crypto capital of the world”. In recent days, bitcoin — the biggest digital token by market value — leapt to an all-time high of more than $110,000 as traders bet that Trump’s government would be much more open in its approach to crypto assets than previous administrations.
The cryptocurrency was trading just below $108,000 on Wednesday morning.
In its new statement, the labour department said that the 2022 directions around “extreme care” — issued under the Biden administration — had “marked a departure from the department’s historically neutral, principled-based approach to fiduciary investment decisions”.
The department added that its revocation of the 2022 wording meant that it was “[reaffirming] its neutral stance, neither endorsing, nor disapproving of, plan fiduciaries who conclude that the inclusion of cryptocurrency in a plan’s investment menu is appropriate”.
Referring to the previous administration’s guidance as “over-reach,” US secretary of labour Lori Chavez-DeRemer said that the department was “rolling [this] back” and “making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats”.
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In the US, 401k plans are among the most popular ways working Americans save for retirement, giving them the option to invest some of their salaries in publicly traded securities tax free. Employers work with plan managers to offer a limited set of investment options.
Retirement plan managers and sponsors must still comply with the Employee Retirement Income Security Act, which requires them to act in investors’ best interest by taking into account the potential risks and rewards of investments.
Significant volatility in crypto assets has often made managers and companies that sponsor employee plans reluctant to offer direct investments in tokens on concerns it could open them to lawsuits.
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