A financial planning company that allows clients to include cryptocurrency in their 401(k) retirement plans has sued the U.S. government.
In a new lawsuit against the U.S. Department of Labor, ForUsAll, a retirement savings firm, says the department is waging an “unreasonable and self-defeating” campaign against digital assets.
The suit cites the Administrative Procedures Act and asks the U.S. District Court for the District of Columbia to revoke a Department of Labor compliance order issued March 10.
The suit seeks to preserve the right of American investors to choose how to invest money in their own retirement accounts.
Based on the provisions of the Act, we challenge the Department of Labor’s unreasonable actions to restrict the use of cryptocurrency in defined contribution retirement plans, which exceeds their authority and violates the Employee Retirement Income Act, and ignores the public consultation practices established by the Act.
Here’s what the U.S. Department of Labor’s guidance document on digital assets says:
At this early stage in the history of cryptocurrencies, the Department has serious concerns about the prudence of the fiduciary’s decision to give 401(k) plan participants access to direct investments in cryptocurrencies…
These investments pose significant risks and challenges to participants’ retirement accounts, including significant risks of fraud, theft and loss of funds…
The U.S. Department of Labor’s list of special concerns includes the speculative nature of cryptocurrency, volatility, the investor’s need to make informed decisions, and the ever-changing regulatory environment.
In addition, ForUsAll’s lawsuit states that the Department of Labor’s notice directly contradicts the intent and instructions of the executive order related to cryptocurrency, which President Joe Biden signed on March 9.
The day after President Biden instructed federal agencies to work together to “promote” the development and use of cryptocurrency, the U.S. Department of Labor took the opposite course, issuing a notice that … invented a standard of care, “extreme caution” … announcing a new obligation to monitor investments in “brokerage windows.”
The agency focused solely on cryptocurrency risks… stated that other regulators could halt trading in one of the most widely recognized cryptocurrencies… threatened to launch a series of investigations into fiduciary managers offering access to cryptocurrency.
ForUsAll also draws attention to the fact that no particular asset class is “presumptively imprudent” or requires “paternalistic” investment, and warns of potential future repercussions when the DOL seeks to target cryptocurrencies.
This lawsuit arose in the context of cryptocurrency and seeks to require the U.S. Department of Labor to act strictly within its statutory authority and follow the law in carrying out its actions.
However, we must not forget that tomorrow the illegal actions of a federal agency could just as easily extend to any other type of investment or investment strategy that is not to the liking of high-level DOL officials (under this or any future administration).