Currently, the U.S. Labor Department, which regulates Americans’ retirement savings, allows retirement plan funds to be invested in virtually any type of investment, including crypto, as long as it’s “prudent.” Recently, it attempted to set some boundaries on crypto investments in retirement plans without introducing new rules. It reminded retirement plan administrators of their fiduciary duty, advising employers to “exercise extreme caution before adding a cryptocurrency option to their 401(k) plan investment menu.”

Under federal law, fiduciaries must act solely in the best financial interest of their employees and adhere to an exacting standard of professional care. Fiduciaries, including retirement plan sponsors and trustees, who breach those duties can be held personally liable for any losses to the plan...