The U.S. Department of Labor has been sued over unlawful crypto guidance by a 401(k) plan administrator. This lawsuit was issued to protect the rights of investors that are US-based on how they should invest their money in their retirement accounts.
U.S. Labor Department Sued Over Crypto Guidance
The United State Department of Labor, also known as DOL, and the Secretary of Labor Martin J. Have been issued a lawsuit based on the department’s Compliance Assistance Release No. 2022-01. The guidance titled “401(k) Plan Investments in cryptocurrencies”, was issued on 10th March.
This filed lawsuit expects the Labor Department to breach its purview which is statutory, by threatening a so-called “investigative program” companies targeted to the plan sponsors that offer digital assets for investments.
The court document says: “This lawsuit seeks to preserve the rights of American investors to choose how to invest money in their own retirement accounts.”
This action portrayed by the U.S Labor Department indirectly eliminates the rights of American citizens or investors to invest in whatever they choose to invest in, just like cryptocurrency. Meanwhile, the lawsuit’s motive is only to protect these rights.
The plaintiff is Forusall Inc., which is the first company to make the investment of cryptocurrency available to 401(k) plan participants through a self-directed window, and that also provides administrative and other services to retirement plans.
The lawsuit complaint states: “DOL’s issuance of the Release was arbitrary, capricious, and otherwise not in accordance with law, and in excess of DOL’s statutory jurisdiction, authority, or limitations, and is, therefore ‘unlawful and [shall be] set aside.”
Fidelity’s decision to offer Bitcoin investment in 401(k) accounts troubled the U.S Labor. Ali Khawar, the Acting Assistant Secretary of the Labor Department’s Employee Benefits Security Administration, said: “We have grave concerns with what Fidelity has done.”
The same decision by the financial services firm, Fidelity, to allow the investment of Bitcoin in 401(k) retirement accounts raised concern among some of the lawmakers being against the idea of the offering of crypto for retirement accounts, including Elizabeth Warren (D-MA) the U.S. Senator. She subsequently sent a letter questioning the financial services giant’s plan to allow Bitcoin investments in 401(k) accounts, to the CEO of Fidelity Investments, Abigail Johnson.
On the other hand, some other lawmakers are really worried about this lawsuit issued by the U.S labor Department with their aim to prevent citizens and/or investors in the US from investing in digital assets like cryptocurrency for retirement. In response to the Department of Labor (DOL) crypto guidance, Tommy Tuberville (R-AL), also a U.S Senator, introduced the act of Financial Freedom.
Some of the lawmakers describe this act as legislation to prohibit the U.S. Department of Labor (DOL) from issuing the crypto regulation or guidance that limits the type of investments that 401(k) self-directed account investors can pick from through a brokerage window.
What Are 401(k) Accounts?
This is a type of retirement savings plan that is offered by many workplaces across the U.S with a tax advantage. It is called after a provision of the Internal Revenue Code of the U.S. When employees sign up for a 401(k) retirement plan, they basically agree to have their portion of each paycheck deposited directly into an investing account.
