The US Department of Labor has been sued by a 401(k) plan administrator over its cryptocurrency guidance. “This lawsuit seeks to protect the rights of American investors about how to invest money in their own retirement accounts.”
US Labor Department Sued Over Crypto Guidance
The U.S. Department of Labor (DOL) and Labor Secretary Martin J. Walsh have been sued over the Department’s Compliance Assistance Release No. 2022-01. The guidance, titled “401(k) Plan Investing in Cryptocurrency,” was issued on March 10.
The lawsuit alleges that the Labor Department violated its statutory scope by threatening “an investigative program” aimed at scheme sponsors offering digital assets.
According to the court document:
The lawsuit seeks to protect the rights of American investors to choose how to invest money in their retirement accounts.
Plaintiff Forusall Inc. It provides administrative and other services for retirement plans. The company claims to be “the first to announce that it will make cryptocurrency available to 401(k) plan participants through a self-directed window,” the lawsuit details.
The complaint states:
DOL’s issuance of a release was arbitrary, arbitrary and otherwise not in accordance with law, and exceeded DOL’s statutory jurisdiction, authority or limitations, and was therefore ‘unlawful and [shall be] Cancel.’
Following the Department of Labor’s crypto guidance, Fidelity Investments Inc. announced that it will allow bitcoin in 401(k) accounts.
Fidelity’s decision upset the Labor Department. “We have serious concerns about what Fidelity has done,” said Ali Khawar, acting assistant secretary of the Labor Department’s Employee Benefits Protection Administration.
The financial services firm’s decision to allow bitcoin in 401(k) retirement accounts also raised concerns among some lawmakers, including US Senator Elizabeth Warren (D-MA). She later sent a letter to Abigail Johnson, CEO of Fidelity Investments, questioning the financial services giant’s plans to allow bitcoin investments in 401(k) accounts.
On the other hand, some lawmakers are concerned with the Labor Department’s effort to prevent Americans from investing in crypto assets for retirement. In response to DOL’s crypto guidance, US Senator Tommy Tuberville (R-AL) introduced the Financial Freedom Act. The lawmaker described the bill as “law to prevent the US Department of Labor (DOL) from issuing a regulation or guidance that limits the types of investments that can be made through the self-directed 401(k) account investor brokerage window.” You can choose through.
What do you think about this lawsuit against the Labor Department? Let us know in the comments section below.
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