The Department of Labor's Employee Benefits Security Administration ("EBSA") reminded 401(k) plan fiduciaries of their duties to participants when considering plan investments involving cryptocurrencies.
In a Compliance Assistance Release, the DOL emphasized that, under ERISA, fiduciaries must act solely in the financial interests of plan participants and must adhere to “an exacting standard of professional care." The DOL stated that it has "serious concerns" about the prudence of a fiduciary’s decision to expose participants to the risks associated with investments in cryptocurrencies. The DOL highlighted these risks, including (i) the volatility and speculative nature of crypto investments, (ii) valuation concerns, (iii) the difficulty in making informed investment decisions on these assets, and (iv) the evolving regulatory environment.
The EBSA stated that it will be conducting an investigative program into all plan fiduciaries that offer participants investments in cryptocurrencies and will make all efforts to protect the interests of plan participants and beneficiaries with respect to these investments.
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