US Labor Dept Lifts Biden-Era Crypto Restrictions For 401(k) Retirement Plans

Daniel Carter

Economic

Cryptocurrency

Political

Summary:

The U.S. Department of Labor on Wednesday withdrew its 2022 guidance on including crypto in 401(k) retirement plans. This may enable fiduciaries in retirement plans to invest in Bitcoin and other cryptocurrencies, moving away from guidance that urged “extreme care.”

Labor Department Eases Crypto Investments in 401(k) Plans

The U.S. Department of Labor's Employee Benefits Security Administration rescinded a Biden-era compliance guideline, as per an official announcement on May 28.

The 2022 guidance prevented fiduciaries from including crypto options such as Bitcoin in 401(k) retirement plans due to volatility, fraud, and regulatory uncertainty. Notably, the “extreme care” language shifted from the requirements of the Employee Retirement Income Security Act (ERISA).

U.S. Secretary of Labor Lori Chavez-DeRemer slammed the earlier stance as government overreach, sticking to the rationale that investment decisions should be left to fiduciaries, not bureaucrats.

“The Biden administration's Department of Labor made a choice to put their thumb on the scale,” said Chavez-DeRemer, adding.

“We're rolling back this overreach and making it clear that investment decisions should be made by fiduciaries, not DC bureaucrats.”

With this reversal, the labor department has returned to its neutral position. It neither encourages nor opposes crypto investments in retirement savings plans.

Mainstream Adoption of Bitcoin and Crypto Gets Broader

With the guidance lifted, it could lead to 401(k) retirement plans to offer Bitcoin or crypto-related investments, such as exposure to spot Bitcoin ETFs.

Moreover, an increased demand for Bitcoin and crypto exposure from 401(k) plans might further legitimize Bitcoin as an asset class. The broader Wall Street companies are adding Bitcoin as a reserve asset, diversifying their investment assets.

Led by Michael Saylor's Strategy, other companies such as Trump Media, Metaplanet, and GameStop have purchased Bitcoin. President Donald Trump's focus on making Bitcoin a strategic reserve asset significantly fueled and eased Bitcoin buying in the United States and overseas.

Similarly, spot Bitcoin ETFs such as BlackRock's iShares Bitcoin ETF (IBIT) and Fidelity's FBTC are likely to witness increased demand from 401(k) providers. As per BlackRock data, IBIT holds Bitcoin worth $71.9 billion at the time of writing.

What Does It Mean for Bitcoin Price?

Bitcoin price could witness a significant rally with retirement plans beginning to include crypto-related investments. While fiduciaries must still adhere to ERISA's prudent investor rule and evaluate crypto's risks, including volatility, security, and regulatory shifts, against potential returns.

Analysts from Standard Chartered and Intellectia AI predicted Bitcoin to hit as high as $200K by the year-end. BTC price recently hit a new ATH of $111,970, but tariff war, macro risks, and selloffs by miners as well as whales kept the price at bay.

Bitcoin price fell 0.68% in the past 24 hours, with the price trading at $108,261 at the time of writing. The 24-hour low and high were $106,968 and $109,094, respectively. Moreover, the trading was slightly upby 0.33% at $52.13 billion in the last 24 hours, indicating a rising interest among traders.

The sentiment remained mixed in the derivatives market today, as per CoinGlass data. BTC futures open interest (OI) on CME declined 0.95% to $17.63 billion. Whereas, BTC futures OI jumped 1.50% on OKX, Bybit, and Bitget.

Source: CryptoSlate

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Blue River

Technical Analysis

The EURUSD pair came under pressure following a US Trade Court ruling and the release of the latest FOMC meeting minutes. Full out more in our analysis for 29 May 2025.

EURUSD forecast: key trading points

Market focus: the US Court of International Trade blocked President Donald Trump’s tariffs
Current trend: correcting downwards
EURUSD forecast for 29 May 2025: 1.1200 and 1.1300

Fundamental analysis

The EURUSD rate declined as the US dollar strengthened after the US Court of International Trade overturned tariffs imposed by President Donald Trump. The court ruled that the tariffs were unlawful, directly challenging Trump’s trade agenda. The administration is expected to appeal the decision.

Meanwhile, yesterday’s release of the FOMC meeting minutes revealed the Fed’s cautious stance amid current economic uncertainty. Committee members highlighted the need for patience and greater clarity on inflation and broader economic trends before taking further policy action.

EURUSD technical analysis

On the H4 chart, the EURUSD pair is undergoing a downward correction, retreating to the support area around 1.1200. Bulls are attempting to regain control and reverse the move. With the overall daily trend remaining upward, the pair will likely continue its upward trajectory following the correction.

The EURUSD forecast suggests a rebound towards 1.1300 and higher in the short term if bulls hold the price above 1.1200. However, if bears push quotes below this level, the downward correction could deepen towards the next support at 1.1150.

Summary

The EURUSD pair plunged to the 1.1200 area amid renewed dollar strength. The market will keep a close eye on tomorrow’s US inflation data.

Source: RoboForex

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Gerik

Economic

China–U.S. Trade War

The Growing Challenge of Rare Earth Dependence

The U.S. is rapidly seeking alternative sources for rare earth elements as trade tensions with China continue to escalate. These minerals, which are crucial for the production of electronics, electric vehicles, and defense systems, have long been dominated by China, which controls a significant share of the global supply.

In 2024, China accounted for 69% of global rare earth production and holds nearly half of the world's reserves. It also controls more than 90% of the processed rare earth supply needed for permanent magnets used in electric vehicle motors, including key elements like neodymium, praseodymium, dysprosium, and terbium. As a result, the U.S. is scrambling to find ways to reduce its dependence on China, which has been tightening its grip on the global rare earth market.

U.S. Investment in Recycling and Alternative Technologies

In response to the growing pressure, the U.S. government has started investing in rare earth recycling companies. In September 2024, the U.S. Department of Defense allocated $4.2 million to Rare Earth Salts, a company specializing in extracting rare earth oxides from recycled products like fluorescent light bulbs. Japanese companies, such as Toyota, are also investing in technology to reduce rare earth usage in their products.

According to AlixPartners, a consulting firm, an electric vehicle (EV) with a single-motor battery requires approximately 550 grams of rare earths, compared to only 140 grams for a gasoline-powered car. For hybrid cars using nickel-metal hydride (NiMH) batteries, the figure can rise to 4.45 kg due to the use of lanthanum. Despite the U.S. having only 7.5% of its car sales in EVs in Q1 of 2025, EV sales are rapidly growing in China, where over 50% of new cars are electric or hybrid.

China's Recent Export Restrictions

In April 2025, China implemented export restrictions on seven types of rare earth elements, including terbium, which is used in electric vehicles. China also limited exports of cerium, another key element for the auto industry. These restrictions are forcing Western economies to confront the reality of their over-reliance on Chinese rare earth supply.

Western countries are actively seeking alternatives but face significant challenges. Developing new mining operations and processing facilities for rare earths would take years and require highly specialized expertise. Meanwhile, recycling technologies, while a long-term solution, are still costly and energy-intensive. According to Henry Sanderson, a member of the Royal United Services Institute (RUSI), 70% of the 200 kg of minerals in each EV is tied to China, highlighting the difficulty of shifting away from Chinese supply chains.

Even as EV sales slow in the U.S., rare earths remain vital for the defense sector. For example, the F-35 fighter jet uses approximately 408 kg of rare earths. The reliance on rare earths extends beyond the automotive industry, with key minerals such as gallium, germanium, and tungsten also controlled by China. These materials are crucial for semiconductors, military applications, and energy storage.

A Critical Shortage Looms for Strategic Sectors

China’s control over tungsten, an element used in cutting tools, semiconductors, batteries, and weapons, is particularly concerning. China produces around 80% of the world's tungsten, and the U.S. imports 27% of its tungsten from China. The potential shortage of tungsten and other critical materials could severely impact industries such as automotive, healthcare, and aerospace.

As new sources of tungsten come online in countries like South Korea in 2025, supply for defense needs might be met, but critical shortages will persist in industries like automotive and aerospace. The global scramble for rare earths and other strategic materials underscores the need for diversification and self-sufficiency to safeguard both economic and national security interests.

The U.S. is facing a severe challenge as China continues to tighten its control over rare earth elements and other critical materials. While efforts to develop alternative sources and improve recycling technology are underway, the scale of the problem means that Western economies will continue to struggle with supply shortages for years to come. The situation is further complicated by geopolitical tensions, forcing countries to rethink their reliance on Chinese supply chains and seek more secure, diversified sources of these vital resources.

Source: CNBC

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Risk Warnings and Disclaimers

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Gerik

Economic

China–U.S. Trade War

Fed’s Caution Amid Growing Risks

In the minutes released from its May meeting, the Federal Reserve acknowledged that inflation and unemployment could rise simultaneously, posing complex challenges for U.S. economic policy. The minutes, which followed the May 6–7 meeting of the Federal Open Market Committee (FOMC), indicated that the Fed may need to make tough trade-offs between combating inflation with higher interest rates or supporting job growth by lowering rates.

The Fed’s decision to maintain its policy rate at 4.25% to 4.5% reflects its careful stance as it assesses the economic impact of President Donald Trump’s tariff policies. The minutes noted that while inflation has remained persistent, the effects of the tariffs on the U.S. economy are still unfolding, and the Fed will need more clarity before taking further action.

Tariff-Related Uncertainty and Its Economic Consequences

One of the key points raised in the minutes was the uncertainty surrounding the new tariffs, particularly those targeting countries like China. While some tariffs were temporarily delayed, the Fed remains cautious, as these policies could continue to affect both inflation and the broader economy. The minutes also referenced concerns over rising Treasury yields and their potential impact on financial stability.

Despite these concerns, the minutes emphasized that U.S. economic growth remains "solid," with the labor market in a “relatively balanced” state and consumer spending still strong. However, the potential for inflation to stay higher than expected and the possibility of a weakening job market as the year progresses were key concerns.

Dual Risks: Inflation and Unemployment

The minutes stressed the growing risks posed by the potential combination of rising inflation and higher unemployment, which could create difficult decisions for the Fed. If inflation remains stubbornly high while employment slows, the Fed may face the dilemma of choosing between further tightening to control inflation or easing to stimulate the economy and protect jobs.

The Fed’s new growth projections reflect some moderation. The Fed’s research team has lowered its 2025 growth forecast to 0.8%, nearly halving its previous estimate of 1.5%. The U.S. labor market, while still strong, is showing signs of weakness, with the unemployment rate expected to exceed the natural rate of employment by the end of the year and remain elevated for the next two years.

The continued uncertainty around tariffs and trade negotiations, especially with China, remains a significant concern. As of now, the tariffs that were imposed earlier in the year are on hold, with talks set to continue through July. Despite this, the uncertainty surrounding these policies remains high.

Fed’s Path Forward

The Federal Reserve is set to meet again on June 17-18, when it will provide new projections for inflation, job growth, and economic expansion, along with updates on its expected interest rate path. The meeting will likely provide more clarity on whether the Fed will continue with its cautious approach or move toward easing in response to slowing growth and persistent inflation.

With inflation risks lingering and concerns about rising unemployment, the Federal Reserve faces a challenging balancing act in managing U.S. monetary policy. While tariff delays provide temporary relief, long-term uncertainty remains, and the Fed will continue to assess the evolving situation before making further decisions on interest rates.

Source: Investing

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Risk Warnings and Disclaimers

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Gerik

Economic

Court Ruling and Immediate Market Reactions

On May 29, 2025, a U.S. federal court blocked President Trump’s sweeping tariffs on imports, leading to a surge in both U.S. and Asian equities, and a strengthening of the U.S. dollar. The Manhattan-based Court of International Trade ruled that the president had exceeded his authority in imposing tariffs under the International Emergency Economic Powers Act (IEEPA), arguing that the power to regulate tariffs belongs solely to Congress.

While the ruling temporarily paused Trump's broad tariff impositions, the White House swiftly filed an appeal, and it remains unclear how the case will unfold. This ruling offers a momentary relief from the trade uncertainties that have rattled global markets for the past two months, leading to optimism among investors. The dollar saw a sharp increase, rising against safe-haven currencies like the Swiss franc and Japanese yen.

Uncertainty and Impact on Trade Negotiations

Despite the positive reaction in financial markets, analysts caution that the ruling does not eliminate the risk of prolonged policy uncertainty. The decision only blocks some of Trump's tariff actions, leaving room for sector-specific tariffs to remain in place or for alternative legal avenues to be pursued. Goldman Sachs analysts highlighted that the ruling does not fundamentally alter the long-term tariff policies or trade negotiations with major U.S. trading partners.

The court’s decision may also encourage other countries to delay trade negotiations with the U.S. while awaiting further developments on the legal challenges to Trump's tariff agenda. Market analysts believe that this extended uncertainty could affect corporate investment decisions, as businesses remain cautious about future trade relations and potential tariffs.

Market Reactions: Asia Leads the Way

Asian stock markets were quick to react positively to the court’s decision, with Japan's Nikkei 225 rising 1.7% and South Korea's Kospi advancing by 1.8%. The broader MSCI Asia-Pacific index also saw an uptick of 0.5%, with Chinese blue-chip stocks gaining 0.6%. In the U.S., S&P 500 futures climbed 1.6%, while Nasdaq futures rose by 2.0%, buoyed by positive earnings reports from companies like Nvidia.

Nvidia’s strong earnings and optimistic revenue forecast helped offset other concerns, including reports of new restrictions on U.S. technology exports to China. Despite these geopolitical tensions, the relief from the court ruling provided a temporary boost to market sentiment.

Commodity and Bond Markets Respond

The legal decision also influenced commodity markets. Gold prices fell 0.5% to $3,271 per ounce, while oil prices continued their upward trend, with Brent crude rising by 96 cents to $65.87 a barrel, driven by supply concerns and geopolitical tensions.

In the bond market, U.S. 10-year Treasury yields rose 3 basis points to 4.51%, as the ruling further reduced expectations for a Federal Reserve rate cut in the near future. The probability of a rate cut in July dropped to just 22%, with September now seen as the more likely timeframe.

While the U.S. court’s decision to block Trump’s tariffs has provided a temporary respite for global markets, the uncertainty over future tariff actions continues to hang over economic outlooks. The ruling has temporarily boosted investor sentiment, but it is unclear how long the optimism will last as the legal process moves forward and trade negotiations remain in flux. The situation underscores the broader concerns about U.S. trade policy and its long-term impact on global markets and economic growth.

Source: Reuters

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Economic

China–U.S. Trade War

Japan’s Strategic Approach in Tariff Negotiations

As Japan heads into a fourth round of tariff talks with the U.S., the country is considering using the purchase of U.S. defense equipment as a potential bargaining chip. Ryosei Akazawa, Japan’s top tariff negotiator, emphasized that the purchase of defense equipment could contribute to the U.S. trade surplus, making it a valuable consideration in the trade discussions. Akazawa, who will meet with U.S. Treasury Secretary Scott Bessent in Washington, outlined that Japan’s proposals would also include cooperation on shipbuilding, revisions to inspection standards for imported automobiles, and increased imports of U.S. farm products.

The discussions come as Japan faces a 24% tariff rate starting in July unless it can negotiate a favorable deal with the U.S. Akazawa’s comments signal Japan’s determination to use defense procurement, such as fighter jets, to reduce trade tensions and secure a more balanced trade relationship with the U.S.

Defensive Equipment and Broader Trade Strategies

While the specific defense equipment Japan is considering has not been finalized, media reports suggest that President Trump pitched the F-47 fighter jet in a recent call with Japanese Prime Minister Shigeru Ishiba. The inclusion of defense purchases in the negotiation package is seen as a way for Japan to sweeten the deal while addressing the U.S.’s trade deficit with Japan.

Despite the U.S. court’s recent ruling to block President Trump’s sweeping tariffs, which has added another layer of uncertainty, a source close to the negotiations stated that Japan’s strategy would remain unaffected. Japan is focused on not only addressing “reciprocal” tariffs but also tackling sector-specific tariffs, especially those imposed on automobiles. The ruling, which blocks broad tariffs, does not alter Japan's approach to these specific issues in its discussions with the U.S.

Currency and Military Spending Issues Remain Separate

Although the initial rounds of negotiations included concerns over currency rates, with past U.S. claims about Japan's weak yen, these issues have been separated from the ongoing tariff talks. Akazawa and U.S. officials have reiterated that currency matters would be dealt with separately, and the Treasury Department has noted that the current dollar-yen rate reflects economic fundamentals. Japan has also denied reports suggesting that it would increase its share of the costs for U.S. troops stationed in Japan, with officials asserting that the existing sharing arrangement remains appropriate.

The G7 summit in mid-June, where U.S. President Trump and Japan’s Prime Minister Ishiba are set to meet, is expected to play a significant role in advancing the trade talks. For now, Japan continues to push for a resolution that eliminates both reciprocal and industry-specific tariffs, particularly on its key export sectors. While uncertainty remains in the wake of the court ruling, Japan’s strategic approach, combining defense procurement and trade concessions, reflects a calculated effort to mitigate tariffs and strengthen the economic partnership between the two nations.

Source: Reuters

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Economic

Short-Term Optimism Follows Legal Victory

On May 29, 2025, a U.S. court's decision to temporarily block many of President Trump’s tariffs lifted market sentiment, with major equity indexes rising, particularly in Asia. The court ruled that Trump overstepped his authority in implementing broad tariffs on imports, a decision that immediately appealed to risk assets and the U.S. dollar, which had suffered under the tariff confusion. The ruling temporarily alleviated concerns that the tariffs would continue escalating global trade tensions and economic challenges.

However, the ruling’s long-term impact remains uncertain. While the immediate market reaction has been positive, the U.S. administration quickly filed an appeal, signaling that policy uncertainty may persist for the foreseeable future.

Economic Impact of Prolonged Trade Uncertainty

Despite the temporary optimism sparked by the ruling, analysts warn that ongoing trade uncertainty could harm business operations and investment. David Chao, global market strategist for Asia Pacific at Invesco, expressed concerns that businesses may delay key decisions, such as hiring, capital expenditure, and wage increases, which could dampen earnings and consumption in the long term. Chao stressed that the uncertainty surrounding tariff policies makes it difficult for companies to plan for future growth, creating a risk of economic stagnation.

The ruling, while a marginal positive for market sentiment, does not resolve the underlying issues of policy uncertainty. Charu Chanana, chief investment strategist at Saxo, noted that while the decision may reduce the most pessimistic growth projections, businesses still lack clarity about the future direction of trade policy. The volatility created by Trump's back-and-forth tariff changes has led to a shift in investment strategies, with investors opting for shorter-term horizons and tactical trades rather than long-term commitments.

Global Stock Reactions and Regional Growth

The court’s decision sent Asian stock markets higher, particularly in South Korea and Japan, where the Kospi and Nikkei indexes gained more than 7% from the time of Trump’s "Liberation Day" tariffs. Global markets, which had been under pressure from Trump's trade wars, saw a rebound, with the S&P 500 rising 3.8% since the tariffs were first announced.

However, while the immediate pressure has eased, concerns remain about the potential for higher courts to overturn the ruling, keeping the trade environment volatile. Sean Callow of ITC Markets in Sydney noted that investors are betting on the likelihood of U.S. courts preventing further economic damage, which could brighten growth prospects and strengthen the U.S. dollar.

Uncertainty Continues to Hinder Long-Term Economic Decisions

For businesses and central banks, the prolonged policy uncertainty is proving detrimental. Executives and policymakers are hesitant to make long-term decisions, which could take years to implement. Kei Okamura, a portfolio manager at Neuberger Berman in Tokyo, highlighted how the “stop-and-go” nature of trade policies hampers strategic decision-making, reinforcing the wait-and-see stance taken by central banks and investors.

While the U.S. court ruling against Trump’s tariffs offers short-term relief for global markets, the continuing uncertainty over U.S. trade policies and the potential for future appeals creates a challenging environment for businesses and investors. As long as tariff-related volatility persists, the outlook for global economic growth remains clouded, making it difficult for firms to make long-term investment decisions.