On March 10, 2022, US Department of Labor (DOL) issued guidance addressing fiduciary considerations relevant to the investment in cryptocurrency and similar digital assets by defined contribution plans such as 401(k) plans. In the guidance, the DOL takes a decidedly conservative approach to cryptocurrency, stating that it has “serious concerns” about the prudence of making cryptocurrency investments available as an investment option, including through an open brokerage window. DOL questions the extent to which cryptocurrency may be an appropriate retirement investment for numerous reasons, including extreme pricing volatility, concerns about the safe-keeping of digital assets and the associated risk of loss, the reliability and accuracy of cryptocurrency valuations, and the uncertain and evolving regulatory climate for cryptocurrency. The guidance concludes by announcing that DOL expects to launch an investigative program targeting defined contribution plans that permit cryptocurrency and similar digital investments. In light of DOL's position and planned investigations, retirement plan fiduciaries that are presently offering, or considering offering, cryptocurrency as an investment option, should review their fiduciary obligations in consultation with their counsel and other fiduciary advisors.
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