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Monday, March 27, 2023

Lawsuit Claims US Labor Department’s Crypto Guidance Is Unlawful

Lawsuit Claims US Labor Department’s Crypto Guidance Is Unlawful – The US Department of Labor (DOL) and Secretary of Labor Martin J. Walsh have been sued over Compliance Assistance Release No. 2022-01, which was issued by the department. On March 10, the guidance, titled “401(k) Plan Investments in Cryptocurrencies,” was issued.

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According to the lawsuit, the Labor Department went beyond its statutory authority by threatening an investigative campaign against plan sponsors that supply digital assets.

According to the court document:

“The goal of this lawsuit is to protect American investors’ freedom to choose how to invest their money in their own retirement plans.”

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Forusall Inc., a company that offers administrative and other services to retirement programs, is the plaintiff. According to the lawsuit, 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.”

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According to the complaint:

“DOL’s issuance of the Release was arbitrary, capricious, and otherwise not in conformity with law, as well as beyond DOL’s statutory jurisdiction, authority, or limitations, and is thus “unlawful and must be set aside.”

Fidelity Investments Inc. has declared that bitcoin will be accepted in 401(k) accounts, following the Labor Department’s crypto guidance.

The Labor Department was worried by Fidelity’s decision. “What Fidelity has done bothers us much,” Ali Khawar, Acting Assistant Secretary of the Labor Department’s Employee Benefits Security Administration, stated.

Some lawmakers, including U.S. Senator Elizabeth Warren, are concerned about the financial services firm’s decision to allow bitcoin in 401(k) retirement accounts. She then wrote a letter to Fidelity Investments CEO Abigail Johnson, raising concerns about the company’s proposal to enable bitcoin investments in 401(k) accounts.

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Lawsuit Claims US Labor Department’s Crypto Guidance Is Unlawful – On the other side, some lawmakers are concerned about the Labor Department’s proposal to prevent Americans from investing in crypto assets for retirement purposes. Senator Tommy Tuberville (R-AL) presented the Financial Freedom Act in response to the Department of Labor’s crypto guidelines.

The bill is “legislation prohibiting the United States Department of Labor (DOL) from issuing a regulation or advisory that limits the types of assets that self-directed 401(k) account investors can choose through a brokerage window,” according to the lawmaker.

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