DWN Op-Ed: Biden’s War on Digital Assets: Part One – The Battle for Your Retirement Savings


In case you haven’t noticed, there is a war going on. However, this war is not in the Ukraine. Nor is it against Russians.

Rather, these battles are being fought right here on US soil, with regulatory bullets, against decentralized finance and digital assets.

Although declared in secrecy, Biden’s war on decentralized finance should not come as a surprise. It was predicted that a covert operation would be waged under the guise of “investor protection,” “climate risk,” and “national security.”

What does seem unexpected; however, is the speed at which this war is progressing.

The government’s first strike arrived on March 9, 2022 when Biden, circumventing Congress, issued an Executive Order laying out a national policy for digital assets, tasking the “whole-of-government” to “study” digital assets. Apparently, this administration believes that digital assets have become so perilous that they now warrant the focus of the entire federal government.

No less than 24 hours following the signing of the Executive Order, as all federal departments and agencies were supposedly immersed in their digital asset “studies,” the Department of Labor issued guidance for 401(k) Plan Investments in “Cryptocurrencies” (No. 2022-01).

DOL personnel are either quick studies or they were able to procure some really good cliff notes, for a government arm has not moved this fast since the Canadian finance minister sprinted to freeze bank accounts of picketers. 

In any event, the DOL’s timing is troublesome on its face, and it speaks volumes as to the government’s true intentions with respect to digital assets.

If the administration was genuinely serious about conducting meaningful analysis on cryptocurrencies, its departments would have waited more than one day to release any guidances. Their haste demonstrates a flagrant disregard for the entire democratic process and a sheer indifference towards those taking notice. If the government cared at all about how this action would be construed by constituents, it would have at least sat on the DOL’s guidance and feigned due diligence.

Even more unnerving than the timing, is the actual text of the guidance itself. To even call it “guidance” would be a misnomer as the DOL’s release reads more like a blatant threat, warning plan sponsors that exposing 401(k) plans to digital assets would risk triggering a full-scale federal investigation. It reads:

EBSA expects to conduct an investigative program aimed at plans that offer participant investments in cryptocurrencies and related products, and to take appropriate action to protect the interests of plan participants and beneficiaries with respect to these investments. The plan fiduciaries responsible for overseeing such investment options or allowing such investments through brokerage windows should expect to be questioned about how they can square their actions with their duties of prudence and loyalty in light of the risks described above.”

What the DOL failed to address in its “guidance” is that because of their proven ability to provide greater risk-adjusted returns, digital assets are becoming an essential component of modern portfolio construction – particularly during this time of record high inflation and economic upheaval. This is precisely why more and more wealth managers have been embracing them.

According to Fidelity, the share of American and European investment managers with crypto assets in their portfolios increased from 36% to 52% from 2020 to 2021.

Indeed, digital assets are becoming so integral to today’s investment portfolios that Mark Yusko, chief investment officer of Morgan Creek Capital Management and expert on digital assets, has predicted that in less than 5 years, “it will be fiduciarily derelict for fiduciaries to have zero exposure to digital assets.”

Fortunately for we-the-people, the DOL’s bomb is about to boomerang and explode all over the 401(k), yet another dysfunctional retirement vehicle on the verge of mass extinction.

There are two reasons why the DOL’s recent assault on digital assets will ultimately backfire. First, the US labor force is becoming increasingly more gig-centric, rendering the 401(k) useless to a growing proportion of workers. Second, there’s nothing to prevent those with existing 401(k)s from simply moving their assets to self-directed retirement plan options.

According to Self-Directed IRA expert, James A, Jones, for those 401(k) holders seeking more investment choices – including digital assets – there is a little-known workaround called an in-service rollover that allows the transfer of a portion of assets from a current employer’s 401(k) plan to a Self-Directed IRA (SDIRA) without a job change.

Jones further reports that although nearly 90% of 401(k)s have In-Service Transfer allowances, more than 90% of employees are presently unaware that this option is even available to them.

Given the growth of financial literacy resources, coupled with the mounting demand for digital assets and the need for more portfolio diversifiers, expect awareness of 401(k) In-Service Rollovers to intensify in the coming months.

In fact, don’t be surprised if the 401(k) – which eclipsed the defined benefit plan within two decades and now possesses a market value double that of private-sector DB plans – is eventually displaced by a modern retirement vehicle that not only gives holders greater investing liberties and the right to proper portfolio diversification, but one that is far more conducive to a contemporary labor force. 

Fortunately, Americans have the wherewithal to successfully defend against this attack. But this is only the first battle in the government’s war on digital assets. The best thing you can do right now is to arm yourself with knowledge and keep faith that in the end, freedom will prevail and innovation will ensue. They always do.

Dara Albright is a recognized authority on fintech & digital wealth with a distinguished 30-year career in finance & the host of DWealth Muse podcast. She is also the co-founder of DWealth Education, a novel financial EdTech platform offering incentivized learning for financial professionals, business executives and modern-day investors/consumers (“investumers”) as they seek to understand and capitalize on the fintech revolution.