Government Removes Warnings on Crypto in Retirement Accounts: Experts Weigh in on Pros and Cons of Holding Crypto in Your 401(k)

The Department of Labor has rescinded guidance warning against holding cryptocurrencies in retirement savings accounts. Financial experts suggest that adding crypto to a retirement portfolio may be suitable for high-risk tolerance savers with a long retirement horizon. Fidelity is the only major US institution allowing crypto in retirement accounts, but there are specialized crypto 401(k) providers. While crypto holdings could yield significant gains, there are disadvantages to consider, including high risk and limited investment options.

The Department of Labor (DOL) has rescinded its 2022 guidance that cautioned retirement plan sponsors against including cryptocurrency investment options in their 401(k) plans. This move, announced on May 28, 2025, signifies a shift in the administration's stance on cryptocurrencies and their role in retirement savings [1].

The rescinded guidance, issued during the Biden administration, warned that cryptocurrencies present significant risks of fraud, theft, and loss due to their speculative and volatile nature, as well as custodial and record-keeping challenges [2]. The DOL's new stance, however, is more neutral, stating that it neither endorses nor disapproves of plan fiduciaries' decisions to include cryptocurrencies in investment menus [3].

Financial experts suggest that adding cryptocurrencies to a retirement portfolio may be suitable for high-risk tolerance savers with a long retirement horizon. However, the risks associated with cryptocurrencies, such as their high volatility and limited investment options, should be carefully considered [1].

Fidelity is currently the only major US institution allowing cryptocurrencies in retirement accounts, offering employees the option to invest in Bitcoin through their 401(k) plans [1]. There are also specialized crypto 401(k) providers, such as ForUsAll, which have seen increased interest in their services following the rescinding of the Biden-era guidance [1].

While the possibility of significant gains from cryptocurrency investments exists, the high risk and limited investment options are notable disadvantages. As of 2024, only 69 crypto asset investment options were available to 401(k) participants, according to the Government Accountability Office (GAO) [1].

The DOL's decision to rescind the guidance could encourage more plan sponsors to consider including cryptocurrencies in their retirement plans. However, it is essential for investors to understand the risks and make informed decisions about their retirement savings.

References:
[1] https://www.hr-brew.com/stories/2025/06/05/trump-dol-relaxes-401k-guidance-crypto
[2] https://www.pionline.com/washington/dol-scraps-biden-era-401k-crypto-guidance-what-means-retirement-plan-sponsors
[3] https://www.hrmorning.com/news/retirement-plan-investment-crypto/