ForUsAll, a 401(k) provider with over $1.7 billion in assets under management (AUM), has sued the U.S Labor Department (DOL) for planning an investigation into companies offering crypto investment options to 401(k) holders.
The San Francisco-based firm indicated that the regulators also discouraged employers from turning to cryptocurrencies for their retirement planning.
“This lawsuit seeks to preserve the rights of American investors to choose how to invest money in their own retirement accounts,” reads the lawsuit. “Brought under the APA [Administrative Procedure Act], this lawsuit challenges DOL’s arbitrary and capricious attempt to restrict the use of cryptocurrency in defined contribution retirement plans.”
In a separate release from ForUsAll, the firm said that the federal agency should instead focus on its rulemaking process before issuing such guidance publicly.
“The DOL plays several important roles that serve American workers — but ‘armchair financial adviser’ shouldn’t be one of them,” said CEO of ForUsAll Jeff Schulte.
ForUsAll first partnered with Coinbase back in June 2021, offering up to 5% of 401(k) savings in 50 different cryptocurrencies. The startup now serves more than 80,000 retirement savers across 500 plans.
Fidelity has also joined the trend, allowing its clients to diversify their retirement savings with Bitcoin for up to 20%.
As crypto and retirement plans continued to spring up, the DOL was recently joined by various politicians, notably Elizabeth Warren, in urging caution and pushing back against the trend.
Department of Labor’s crypto-retirement guidance
The DOL first issued its guidance against incorporating crypto in 401(k) plans in March 2022.
The guidance cautioned about the risks of adding crypto to retirement investment schemes, citing fraud, theft, and lack of regulation for these assets.
Other issues outlined were the volatile nature of cryptocurrencies, difficulties in book-keeping, valuation concerns, and economic impacts. It went on to add that an investigation would be carried out which looked into companies offering 401(k) accounts with crypto exposure.
“Based on these and other concerns, EBSA (Employee Benefits Security Administration) expects to conduct an investigative program aimed at plans that offer participant investments in cryptocurrencies and related products,” read the guidance at that time.
The DOL isn’t banning cryptocurrency in 401(k)s outright though, reminded Ali Khawar, acting assistant secretary of the department’s EBSA unit in an interview with The Wall Street Journal last month.
“I don’t view this guidance as a forever and ever thing,” Khawar said. “It is focused on this stage of development.”
Want to be a crypto expert? Get the best of Decrypt straight to your inbox.
Get the biggest crypto news stories + weekly roundups and more!
