By Elizabeth O'Brien

The Trump administration on Wednesday rolled back a guideline that urged companies to exercise "extreme care" in offering cryptocurrency in their 401(k) plans. It is a win for Fidelity Investments, which is a major player in crypto brokerage services and products and had objected to the Biden-era rule.

Instead of discouraging the use of cryptocurrency, the Department of Labor is taking a neutral stance toward plan sponsors that offer digital assets in their 401(k) plan's investment menu, the agency said in a release. In an April 2022 letter to the department's Employee Benefits Security Administration, Fidelity officials said the Biden-era guideline "effectively deems the selection of cryptocurrencies for investment in a 401(k) plan to be imprudent," while acknowledging that crypto assets should be carefully evaluated for possible inclusion in plans.

That same month, Fidelity launched a workplace Digital Assets Account, calling it the industry's first offering to enable people to have a portion of their retirement savings allocated to Bitcoin through their 401(k) investment menu. The company also offers broader digital- asset custody and trading services.

Fidelity had no comment on the Trump administration's move.

The move is a deregulatory nod from a crypto-friendly administration. It comes as Vice President JD Vance spoke on Wednesday at the annual Bitcoin Conference in Las Vegas. "We reject regulators," Vance told attendees. The future of the crypto movement is to be decided by the people, Vance said, "not by unelected bureaucrats."

Crypto adoption within 401(k) plans remains low, and Wednesday's announcement isn't expected to change that overnight. Workplace retirement accounts hold roughly $9 trillion in assets. Companies that sponsor plans are already held to a high standard of providing appropriate investments for their employees, and many fear being sued for not upholding their duty.

Crypto is volatile, and its short-term track record defies categorization, said Jamie Hopkins, chief wealth officer at WSFS Bank and Bryn Mawr Trust. "These still won't check the box to be included in plans yet," Hopkins said.

Many advisors continue to view cryptocurrencies as a speculative asset, even as Bitcoin has risen nearly 18% for the year and 61% over the past 52 weeks. Investors who want some exposure to Bitcoin or its digital brethren should keep it to around 1% to 3% of their overall portfolio, many recommend.

In December, the huge investment company BlackRock said interested investors could consider a 1%-2% allocation to Bitcoin. "Going beyond that would sharply increase bitcoin's share of the overall portfolio risk," a BlackRock report said.

Exchange-traded funds like BlackRock's iShares Bitcoin Trust ETF offer investors exposure to Bitcoin's underlying price movements, but ETFs aren't widely used in 401(k) plans. To the extent they are available, it is often through a self-directed brokerage window that allows some plan participants to invest outside their plan's core offerings.

Write to Elizabeth O'Brien at elizabeth.obrien@barrons.com

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May 28, 2025 15:18 ET (19:18 GMT)

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