The US Department of Labor has been sued by a 401(k) plan administrator over its cryptocurrency guidelines. “This lawsuit seeks to preserve the rights of American investors to choose how to invest money in their own retirement accounts.”
US Department of Labor Sued Over Crypto Advice
The US Department of Labor (DOL) and Secretary of Labor Martin J. Walsh were sued over the Department’s Compliance Assistance Release No. 2022-01. The guidelines, titled “401(k) Plan Investments in ‘Cryptocurrencies'”, were Posted March 10.
The lawsuit alleges that the Labor Department violated its statutory scope by threatening “a program of investigation” targeting plan sponsors who offer digital assets.
According to the court document:
This lawsuit aims to preserve the rights of American investors to choose how to invest money in their own retirement accounts.
The plaintiff is Forusall Inc., which provides administrative and other services to pension plans. The company claims to be “the first company to announce that it would make cryptocurrency available to 401(k) plan participants through a self-directed window,” the lawsuit details.
The complaint states:
The issuance of the release by the DOL was arbitrary, capricious and unlawful, and beyond the jurisdiction, authority or legal limits of the DOL, and is therefore “unlawful and [shall be] put aside.’
Following the Department of Labor’s cryptographic guidelines, Fidelity Investments Inc. announced that it will allow bitcoin in 401(k) accounts.
Fidelity’s decision troubled the Department of Labor. “We are very concerned about what Fidelity has done,” said Ali Khawar, acting assistant secretary for the Department of Labor’s Benefits Security Administration.
The financial services company’s decision to allow bitcoin in 401(k) retirement accounts has also raised concerns among some lawmakers, including U.S. Senator Elizabeth Warren (D-MA). She then sent a letter to Abigail Johnson, CEO of Fidelity Investments, questioning the financial services giant’s plan to allow bitcoin investments in 401(k) accounts.
Some lawmakers, on the other hand, are concerned about the Labor Department’s attempt to prevent Americans from investing in crypto assets for retirement. Responding to DOL crypto guidelines, US Senator Tommy Tuberville (R-AL) introduced the Financial Freedom Act. The lawmaker described the bill as “legislation to prohibit the U.S. Department of Labor (DOL) from issuing regulations or guidelines that limit the type of investments that self-directed investors in a 401(k) account may choose via a brokerage window”.
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