On June 2nd, the U.S. Department of Labor was sued by a 401(k) plan administrator over its cryptocurrency advice. This action seeks to protect American investors’ rights to select how their money is invested in their own retirement funds.
US Labor Department sued after stating that companies that offer crypto in 401(k) should expect to be investigated
— Blockworks (@Blockworks_) June 2, 2022
US Labor Department has been sued on crypto guidance
The U.S. Department of Labor (DOL) and Secretary of Labor Martin J. Walsh has been sued in connection with the DOL’s Compliance Assistance Release No. 2022-01. The document headlined “401(k) Plan Investments in ‘Cryptocurrencies,” which was released on March 10.
The case claims that the Labor Department exceeded its statutory authority by threatening plan sponsors who provide digital assets with an investigation program.
As per the court statement,
“The purpose of this case is to protect American investors’ rights to choose how to make investments in their own retirement plans.”
The plaintiff is the Forusall Inc., that offers administrative and other solutions to retirement programs. The firm claims to be the first corporation to declare that it will make cryptocurrencies available to 401(k) plan members through a self-directed window.
According to the lawsuit,
“DOL’s issue of the Release was arbitrary, capricious, and also not in conformity with law. It was beyond DOL’s statutory jurisdiction, authority, or restrictions, and is thus illegal and must be set aside.”
Fidelity Investments Inc. said that it will accept bitcoin in 401(k) plans in response to the Labor Department’s crypto advice. Some legislators, including U.S. Senator Elizabeth Warren, expressed worry over the financial services firm’s move to enable bitcoin in 401(k) retirement plans. She then wrote to Fidelity Investments CEO Abigail Johnson, criticizing the financial services firm’s decision to enable bitcoin investments in 401(k) plans.
Some senators, on the other side, are concerned about the Labor Department’s attempt to discourage Americans from investing in cryptocurrency for retirement purposes. U.S. Senator Tommy Tuberville sponsored the Financial Freedom Act in response to the DOL’s crypto guidelines. The bill is characterized as law that prohibits the U.S. Department of Labor (DOL) from publishing a regulation or advisory that limits the sort of assets that self-directed 401(k) account investors can pick through a brokerage platform.
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