In a surprising twist, the U.S. Department of Labor has pivoted from its previous cautionary stance on cryptocurrency investments in retirement plans. This Wednesday, the department issued a new compliance directive, casting aside earlier warnings and emphasizing a more neutral approach. The move aligns with a broader trend under President Donald Trump’s administration to dismantle barriers to digital asset investments, signaling a significant shift in the federal government’s approach to crypto.
The New Directive: A Shift in Policy
The Department of Labor’s latest directive underscores a philosophical shift, emphasizing that investment decisions should rest in the hands of fiduciaries rather than bureaucrats in Washington, D.C. “The Biden administration’s Department of Labor made a choice to put their thumb on the scale,” remarked Secretary of Labor Lori Chavez-DeRemer. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.” This marks a stark contrast to the department’s stance in March 2022, when it warned 401(k) plan decision-makers about the volatility and risks associated with cryptocurrencies.
The reversal comes after a tumultuous period for the crypto industry, which saw major players like Celsius Network and Voyager Digital collapse, and the high-profile implosion of FTX. Back then, the department’s concerns seemed well-founded as Bitcoin’s value plummeted by 52% in the year following their advisory. Yet in a twist of fate, an investment made at that low point would now yield an impressive 156% return—a testament to crypto’s notorious volatility.
Trump Administration’s Crypto Embrace
President Trump has openly embraced the crypto industry, positioning himself as a proponent of digital assets. This is reflected in the broader regulatory re-evaluation conducted by agencies such as the Securities and Exchange Commission and the Commodity Futures Trading Commission, who have been reassessing their crypto policies under Trump’s watch. Notably, Trump has been personally involved in crypto through his business ventures, including hosting dinners for memecoin investors and advancing crypto-related endeavors through Trump Media. As explored in our recent coverage of Trump’s Crypto Sherpa Bo Hines, the administration’s efforts to expedite crypto legislation are gaining momentum.
Lori Chavez-DeRemer, who was appointed as Labor Secretary after an unsuccessful congressional bid backed by $1.5 million from the crypto PAC Fairshake, is a key figure in this regulatory shift. Her appointment and the recent directive suggest a strong alignment with Trump’s pro-crypto stance—a move that could reshape the landscape for retirement investments.
Legal and Market Implications
The Labor Department’s past warnings led to legal action in 2023, as California-based 401(k) provider ForUsAll challenged the guidance in court, arguing procedural missteps. This legal battle highlighted the friction between regulators and market players seeking to leverage the high-risk, high-reward nature of digital assets for retirement planning.
As the directive takes effect, it raises important questions about the future of crypto in retirement portfolios. Will this policy reversal invite more volatility into retirement savings, or will it empower fiduciaries to make bolder investment choices? And, perhaps more critically, could it set a precedent for other federal agencies to follow suit? This comes as the U.S. Congress braces for an intense debate over crypto legislation this summer, as detailed in our recent article.
Looking Ahead
The crypto market has always been a landscape of uncertainty and opportunity. As the U.S. government reevaluates its stance, the implications for investors and regulators alike are profound. With Trump’s administration keen on supporting the burgeoning industry, the directive could pave the way for a more crypto-friendly regulatory environment. However, this approach is not without its critics, who caution against the inherent risks of digital assets.
As we move into the second half of 2025, the question remains: will this newfound openness to crypto in retirement plans serve as a catalyst for innovation, or will it simply introduce new risks into an already volatile market? The coming months will be crucial in determining the balance between regulation and freedom in the evolving world of digital finance.
Source
This article is based on: U.S. Labor Department Picks Up Crypto Torch, Throws Out Previous Warnings
Further Reading
Deepen your understanding with these related articles:
- The SEC Can Learn From the IRS in Making Regulation Simpler for Crypto
- US crypto groups urge SEC for clarity on staking
- UK’s FCA Seeks Public and Industry Views on Crypto Regulation
Steve Gregory is a lawyer in the United States who specializes in licensing for cryptocurrency companies and products. Steve began his career as an attorney in 2015 but made the switch to working in cryptocurrency full time shortly after joining the original team at Gemini Trust Company, an early cryptocurrency exchange based in New York City. Steve then joined CEX.io and was able to launch their regulated US-based cryptocurrency. Steve then went on to become the CEO at currency.com when he ran for four years and was able to lead currency.com to being fully acquired in 2025.
