A retirement savings service provider, ForUsAll, is suing the U.S. Department of Labor over recent guidance issued to fund managers and companies that offer 401(k) holders the option to invest in crypto-assets, The Wall Street Journal reported.
The San Francisco-based administrator filed the lawsuit in the U.S. District Court in Washington, D.C., claiming the guidance provided by the regulator was a violation of the Administrative Procedure Act (APA).
According to the guidance, the Labour Department would investigate firms offering options of crypto investments in retirement plans.
ForUsAll is planning to let workers on its retirement plans invest up to 5% of their contributions in crypto. The firm has partnered with Coinbase to allow workers to invest in cryptocurrencies using a self-directed brokerage window.
According to the court filings, the lawsuit:
Seeks to preserve the rights of American investors to choose how to invest money in their retirement accounts. 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.
Labor Department’s guidance is affecting ForUsAll business
The company claimed its business had suffered some setbacks due to the guidance.
The Chief Investment Officer of the firm David Ramirez reportedly said the company had received inquiries from over 150 businesses before the guidance. However, around one-third of them have developed cold feet because of the DOL threats.
It is now asking the court to suspend the guidance and prevent the DOL from implementing it.
Additionally, the firm released a statement calling the agency to focus on making rules instead of issuing general guidance. CEO Jeff Schulte said:
The DOL plays several important roles that serve American workers — but ‘armchair financial adviser’ shouldn’t be one of them.
Fidelity and ForUsAll share similar view
It said that the agency should focus on providing guidance that will help fiduciaries address concerns instead of giving an opinion on crypto.
However, it’s not only the DOL that is worried about this development. Democrat senators Elizabeth Warren and Tina Smith had written a letter to Fidelity questioning the move and failure to follow the DOL guidance.