401(k) retirement provider ForUsAll filed suit against United States Department of Labor

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On Thursday a San
Francisco-based 401(k) retirement provider ForUsAll filed suit against the United States Department of Labor (DOL) and Martin Walsh as Labor secretary in U.S.
District Court in Washington, D.C. Currently, the firm has assets under
management (AUM) of more than $1.7 billion.
ForUsAll sued
DOL for planning an investigation into companies that offers crypto investment options
to 401(k) holders. The firm said that the regulators had also discouraged
employers from planning their retirement using cryptocurrencies. According to
the lawsuit filed under APA, the DOL's attempt to restrict the use of
cryptocurrency in defined contribution retirement plans. 401(k) plans offer
participants investments in cryptocurrency and related products.
In March 2022
the guidance against incorporating crypto in 401(k) plans was first issued by DOL.
The guidance deals with rising awareness regarding the risks like fraud, theft
for adding crypto to retirement investment schemes, and lack of regulation for
these assets. Other issues were also highlighted including the volatile nature of
cryptocurrencies, difficulties in book-keeping, valuation concerns, and
economic impacts. Based on these and other concerns as per the guidance at that
time 401(k) plans are expected to be investigated by DOL's Employee Benefits
Security Administration (EBSA). Hence setting up an investigative program
according to the warning released by DOL. An Administrative Procedure Act (APA) provision
that protects against arbitrary official intrusion on private rights is cited
by the firm as grounds for withdrawing the DOL compliance assistance release issued
in March.
According to ForUsAll
CEO Jeff Schulte because of their distaste for a certain asset class, the
government is suddenly attempting to restrict American investment options. They
are trying to effect a ban for which they don’t have permission from the legal
authority. “This lawsuit seeks to preserve the rights of American investors to
choose how to invest money in their own retirement accounts,” reads the
lawsuit.
In April Acting
Assistant Secretary of the department’s EBSA unit, Ali Khawar was contacted
through a letter by a group of 11 financial industry trade associations. It
stated objection regarding the "rulemaking nature" of the release
without stating a position on the inclusion of cryptocurrency in pension plans.
Some quarters have responded sharply to the DOL release. At the end of April, ten
investor, consumer, worker, and retiree organizations wrote to Khawar in
support of the release. It highlighted that it was consistent with the Employee
Retirement Income Security Act of 1974, which established the 401(k) program
and imposed strict duties on fiduciaries. Around 150 companies from ForUsAll
have signed up for 401(k) plans on crypto.
In June 2021 ForUsAll first partnered with Coinbase. It is offering up to 5% of 401(k) savings in 50 different cryptocurrencies. More than 80,000 retirement savers are now served across 500 plans by the startup. Additionally, Fidelity offers its customers the option of diversifying their retirement savings with Bitcoin up to 20%. Recently DOL was recently joined by various politicians, notably Elizabeth Warren, in urging caution and pushing back against the trend.

Indrani bose
CBW - External Analyst
INDIA