After Warning 401(k) Providers About Crypto, the US Labor Department was Sued
After issuing a warning to 401(k) providers about the risks of allowing cryptocurrency investments, the United States Department of Labor was promptly sued.
In March 2022, the United States Department of Labor (DOL) issued a contentious caution to 401(k) plan trustees, advising them to “exercise extreme care” before considering the addition of cryptocurrency investments to a retirement plan’s investment menu. Presently, a lawsuit has been filed against the agency because of the statement.
ForUsAll, a 401(k) provider based in California, filed a lawsuit against the DOL on the 3rd of June 2022 in the United States District Court in Washington, DC, alleging that the agency violated the Administrative Procedure Act (APA) by issuing guidance without following the proper procedures. The lawsuit was filed on behalf of ForUsAll. According to the arguments presented by ForUsAll, following those procedures would have required the advice to go through a lengthy notice and comment period.
According to the plaintiff’s allegations, the Department of Labor bypassed that process because it was concerned about the potential impact of Super Bowl advertising that encouraged investors to deposit their retirement savings into cryptocurrencies and raced to release the advisory before the event.
ForUsAll claims that the Department of Labor’s “arbitrary and capricious” warning against cryptocurrency and threat of an “investigative program” against plans that offer such investments could set a
concerning precedent for future announcements by any Administration about what investments are permissible.
ForUsAll
This is in addition to the fact that the Department of Labor deviated from the appropriate procedure.
In a statement sent to the News agency, ForUsAll CEO Jeff Schulte noted that the Department of Labor performs various critical duties that help American workers; however, the function of “armchair financial consultant” should not be one of those roles.
Congress has never given government officials the right to pick winners and losers, much less the legal authority to restrict entire asset classes arbitrarily.
Jeff Schulte
And it most definitely never gave agencies the green light to take such sweeping and hasty action without going through a public process.
Additionally, the lawsuit made reference to President Joe Biden’s executive order (EO) on cryptocurrency, which was published one day before the DOL’s guidelines. The directive issued by the White House encouraged a number of federal agencies, including the Department of Labor and the Department of the Treasury, to work together on an approach to cryptocurrency regulation that encompasses the whole government.
ForUsAll emphasized President Joe Biden’s executive order (EO) request to “encourage” crypto. This EO could potentially have a large impact on the crypto industry. If the President is encouraging crypto, it could lead to more mainstream adoption. This could mean more people using and investing in crypto, which would be good for the industry. It might also result in more businesses accepting cryptocurrency as payment, which would benefit the industry.
ForUsAll asserts that it has been impacted directly by the DOL’s guidance. The lawsuit requests that the court vacate and set aside the DOL’s crypto guideline, preventing the DOL from acting to implement it and from pursuing investigations that are outside its permissible scope.
After the introduction of its crypto 401(k) offering in June 2021, the Chief Investment Officer of ForUsAll, David Ramirez, told a News Agency that the company had received queries from more than 150 different businesses.
However, since the Department of Labor stated that they are launching an enforcement initiative targeting firms that add a crypto option to their plan menu, we have spoken with a number of clients.
David Ramirez
Ramirez further said
Of those we spoke with, about one-third have decided to delay making crypto investments available to their employees due to the DOL’s threats.
David Ramirez
Ramirez said that this decision was made directly due to the DOL’s threats.
Barry Pene is a stern blockchain research/copywriter. Barry has been trading cryptos since 2017 and has been invested in issues that would put the blockchain industry on the right pedestal. Barry's research expertise cuts across blockchain as a disruptive technology, DeFis, NFTs, Web3, and reduction of energy consumption levels of cryptocurrency mining.
