A 401(k) plan administrator is suing the US Department of Labor over its cryptocurrency guidance. “This lawsuit seeks to preserve the rights of American investors to choose how to invest in their own retirement accounts.”
US Department of Labor sued over crypto guidelines
The U.S. Department of Labor (DOL) and Secretary of Labor Martin J. Walsh have been sued in connection with the release of the Department of Compliance Assistance #2022-01. A guide titled “401(k) Cryptocurrency Investment Plan” was published 10th of March.
The lawsuit alleges that the Department of Labor violated its statutory authority by threatening an “investigative program” aimed at plan sponsors offering digital assets.
According to the court document:
The lawsuit seeks to preserve the right of US investors to choose how to invest in their retirement accounts.
The plaintiff is Forusall Inc., which provides administrative and other services to pension plans. The company claims to be “the first company to announce that it will make cryptocurrency available to 401(k) plan members through a self-managed window,” the lawsuit says.
The complaint states:
The issuance of the Permit by DOL was arbitrary, capricious, and otherwise unlawful, and in excess of DOL’s statutory jurisdiction, powers, or limitations, and is therefore “unlawful and [shall be] postpone.
Following Department of Labor guidelines for cryptography, Fidelity Investments Inc. announced that it will allow the use of bitcoins in 401(k) accounts.
Fidelity’s decision worried the Department of Labor. “We have serious concerns about what Fidelity has done,” said Ali Khawar, acting assistant secretary for the Labor Department’s Employee Benefits Administration.
The financial services company’s decision to allow the use of bitcoin in 401(k) retirement accounts has also raised concerns among some lawmakers, including US Senator Elizabeth Warren (D-Massachusetts). She subsequently sent a letter to Abigail Johnson, CEO of Fidelity Investments, questioning the financial services giant’s plan to allow investment in bitcoin in 401(k) accounts.
Some lawmakers, on the other hand, are concerned about the Labor Department’s attempt to prevent Americans from investing in crypto assets for retirement. In response to DOL’s guidance on cryptocurrencies, U.S. Senator Tommy Tuberville (R-AL) introduced the Financial Freedom Act. The legislator called the bill “a law that prohibits the U.S. Department of Labor (DOL) from issuing regulations or guidelines that limit the type of investments self-managed 401(k) investors may choose through a brokerage window.”
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