The U.S. Department of Labor was sued by 401(k) plan administrators over cryptocurrency guidance.” The lawsuit aims to protect the rights of American investors to choose how they invest money in their retirement accounts.”
U.S. Department of Labor Sued Over Crypto Guidance
The U.S. Department of Labor (DOL) and Secretary of Labor Martin J. Walsh have been sued over the Department’s Compliance Assistance Release No. 2022-01, titled 401(k) Plan Investments in ‘Cryptocurrencies’ The guidance, issued on March issued on March 10,
The lawsuit alleges that the Department of Labor violated its statutory authority by threatening a “research program” targeting plan sponsors who offer digital assets.
According to court documents,
the lawsuit aims to protect the rights of American investors to choose how they invest their retirement account funds.
The plaintiff is Forsal Corporation, which provides management and other services to 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.
The DOL’s issuance of the release was arbitrary, capricious, and otherwise not in accordance with law, and is “unlawful and [should be] quashed” because it exceeded the DOL’s legal jurisdiction, authority, or limitations.
Following the Department of Labor’s crypto guidance, Fidelity Investments announced it would allow bitcoin in 401(k) accounts.
Fidelity’s decision troubled the Department of Labor. Ali Khawar, acting assistant secretary of the Department of Labor’s Employee Benefits Security Administration, said, “We have serious concerns about what Fidelity has done.”
The financial services firm’s decision to allow bitcoin in 401(k) retirement accounts also sparked concern among some lawmakers, including U.S. Senator Elizabeth Warren (D-MA). She later sent a letter to Fidelity Investments CEO Abigail Johnson, questioning the financial services giant’s plans to allow bitcoin investments in 401(k) accounts.
Meanwhile, some lawmakers are worried about the Department of Labor’s attempt to prevent Americans from investing in crypto assets for retirement.In response to the DOL’s crypto guidance, U.S. Senator Tommy Tuberville (R-AL) has introduced the Financial Freedom Act The Senator has introduced the Financial Freedom Act. The senator described the bill as “legislation that would prohibit the U.S. Department of Labor (DOL) from issuing regulations or guidance that would restrict the types of investments that self-directed 401(k) investors may select through their broker-dealer counterparts.”
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