The Trump administration did another favor for digital currencies like bitcoin on Wednesday, retracting earlier federal guidance that discouraged cryptocurrencies for retirement plans.
The 2022 advice issued under former President Joe Biden urged 401(k) managers to exercise “extreme care” before making crypto an investment choice for workers. But the Labor Department said Wednesday it was tossing that guidance aside because it wasn’t “neutral.”
“The Biden administration’s department of labor made a choice to put their thumb on the scale,” Trump’s labor secretary, Lori Chavez-DeRemer, claimed in a statement. “We’re rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not D.C. bureaucrats.”
Trump, who once called bitcoin “a scam,” has become a huge booster for crypto after the industry rallied behind his run for the White House last year. Regulators halted several investigations of crypto companies after Trump assumed office, while the president hosted a crypto “summit” at the White House.
Meanwhile, crypto has become a way for Trump’s backers — including those in foreign countries — to steer money to his family. The president held a gala at his Virginia golf club last week for the biggest investors of his own meme coin, using his office to promote the Trump family crypto venture.
“He’s auctioning off access,” Sen. Richard Blumenthal (D-Conn.) said Thursday. “It’s corrupt and it’s out there for everyone to see.”
Biden’s Labor Department discouraged crypto for 401(k) plans because it’s a highly speculative asset with volatile prices, to say nothing of high incidences of theft and fraud. When the Labor Department issued its earlier guidance, it said the volatility of crypto could have a “devastating impact” on workers’ 401(k)s, particularly those who are close to retirement age and wouldn’t have much time to recoup losses in the event of a big drop.
Rod Lamkey Jr. via Associated Press
As part of the policy, the Labor Department planned to investigate retirement plans that offered crypto on their menus and to “take appropriate action” if they believed plan holders were being taken advantage of.
“Cryptocurrencies are very different from typical retirement plan investments, and it can be extraordinarily difficult, even for expert investors, to evaluate these assets and separate the facts from the hype,” the agency warned.
Trump seemed to share those same concerns not long ago. He once summed up the dangers of crypto in a 2019 tweet, back during his first presidency and years before he became a bitcoin cheerleader.
“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” he said. “Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….”
Yet, six years later, Trump’s family media company, Trump Media & Technology Group, is turning into a crypto enterprise. The firm announced Tuesday that it had rounded up $2.5 billion from 50 investors to pour into bitcoin, creating what it bills as a “bitcoin Treasury.”
“We view Bitcoin as an apex instrument of financial freedom, and now Trump Media will hold cryptocurrency as a crucial part of our assets,” Devin Nunes, the former GOP congressman who’s now Trump Media’s CEO, said in a statement.