US Labor Department reverses course, now allowing Bitcoin and crypto in 401(k) plans after nearly 3 years of opposition.
The US Labor Department is reversing its previous posture against including Bitcoin and cryptocurrencies in retirement plans.
In the future, the Labor Department will maintain a neutral stance on cryptocurrencies, allowing fiduciaries to incorporate them into 401(K) plans.
US Labor Department Does Not Oppose Inclusion Of Bitcoin In 401(k) Plans
The US Department of Labor is altering its stance on incorporating cryptocurrency options in 401(K) retirement plans, as a press release indicates.
The US Labor Department is revoking its previous 2022 guidance, which cautioned fiduciaries about the risks of including Bitcoin and cryptocurrencies in retirement plans.
At that time, the Labor Department advised fiduciaries to exercise “extreme caution” when providing cryptocurrency options to investors.
The Labor Department’s dire warnings, which did not explicitly prohibit their inclusion, effectively suppressed the inclusion of cryptocurrency in the investment menus of fiduciaries.
“We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats,” said US Secretary of Labor Lori Chavez-DeRemer.
In addition, US Secretary of Labor Chavez-DeRemer asserts that the 2022 guidance is inconsistent with the Department’s impartiality regarding investments.
Additionally, the 2022 guidance contravenes the provisions of the Employee Retirement Income Security Act.
In the future, the US Labor Department will maintain a neutral stance, refraining from either endorsing or condemning the integration of Bitcoin into retirement plans.
Data and comments from the Labour Department have historically influenced the price of Bitcoin.
The recent release of US PPI inflation data has dashed any expectations of a Bitcoin rally.
US Government Agencies Are Becoming More Open To Cryptocurrencies
Despite the 2022 guidance against Bitcoin and crypto investments in 401(K) plans, numerous state-level pension funds continue to support the offering.
Pension funds in Michigan and Wisconsin invest in Bitcoin ETFs, the preferred investment vehicle.
Additionally, the passage of a Strategic Bitcoin Reserve measure in Texas and New Hampshire will result in a greater allocation of funds to Bitcoin by state pension funds.
Numerous government agencies have adopted a favorable attitude toward cryptocurrencies since the commencement of the Trump administration.
The Office of the Comptroller of the Currency (OCC) has revised its guidance to permit federal institutions to engage in cryptocurrency transactions.
In addition, the United States Securities and Exchange Commission (SEC) is becoming a member of the extensive list of government agencies, which is being facilitated by the appointment of new leadership.
The SEC has discontinued litigation against prominent crypto service providers and is rapidly approaching regulatory clarity.
The SEC is conducting a series of crypto roundtables with key sector players to establish a clear regulatory direction, which demonstrates commitment.
