Clifford Chance

A New Type Of Quality Control – The Department Of Labor Warns Fiduciaries Against Including Crypto Assets In Retirement Plans

April 21, 2022

The U.S. Department of Labor recently warned ERISA plan fiduciaries to "exercise extreme care" before including cryptocurrency assets and crypto-based products as potential investment options in 401(k) retirement plans. The DOL articulated a number of "serious concerns" the agency perceives regarding the prudence of including cryptocurrency assets in such plans, and cautioned that plan fiduciaries that do so should expect to be asked to defend the appropriateness of their decisions. The DOL has focused on the appropriateness of crypto assets for retirement plans right after the Supreme Court decided the Hughes v. Northwestern case earlier this year. The Hughes Court held that plan fiduciaries cannot leave bad investment options mixed in the investment lineup with good options. The DOL's crypto asset warning appears to characterize crypto as a "bad option."

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