The U.S. Department of Labor (DOL) has responded to 401k provider ForUsAll’s latest request to cease any enforcement on its initial guidance on cryptocurrencies in retirement plans.
In the latest move of the ongoing saga between the two parties, the DOL accused ForUsAll of misinterpreting its guidance to suit their own agenda and failing to establish any standing, and said the court currently has no jurisdiction over enforcing cryptocurrency investment offerings. ForUsAll had previously said it would drop its lawsuit against the DOL if the court confirmed the Labor Department’s guidance would not be enforced.
“Not going down without a fight, however, ForUsAll asks this Court to attach various conditions to its dismissal of the lawsuit. That is not the way this works,” wrote the DOL in its response. “ForUsAll cannot bring a lawsuit over which the Court lacks jurisdiction and then turn around and request that the Court “retain jurisdiction” (that it does not have) to bind Defendants in perpetuity.”
In its response, the DOL added that its initial guidance had not taken a “definitive position” on fiduciary responsibilities regarding self-directed brokerage windows. Additionally, the Labor Department said that while ForUsAll believed the guidance stated that cryptocurrency in retirement plans “does not violate a fiduciary duty,” the DOL’s guidance actually stated that cryptocurrency as an investment option may comply with fiduciary duties, depending on “specific circumstances in a given situation.”
The DOL later requested the court reject ForUsAll’s conditions and dismiss the suit.
ForUsAll filed a lawsuit against the Department of Labor back in June, claiming the regulators had breached their statutory purview by instituting a policy shift without undergoing a required comment period when it initially issued guidance in March. The guidance cautioned retirement plan sponsors against offering cryptocurrencies in retirement plans, adding that fiduciaries could face an “investigative program” if they allowed digital currencies in their 401k plans. In its June complaint, ForUsAll said it stood to lose up to a third of its potential client base due to the guidance.
The pending lawsuit comes at a time where more 401k fiduciaries are being cautioned against offering cryptocurrencies in their retirement plans, largely due to the collapse of FTX, one of the largest crypto exchange platforms.
Still, some industry experts believe the emergence of large recordkeepers in crypto, like Fidelity Investments, will add a layer of credibility in offering digital assets in retirement plans. Earlier this month, both ForUsAll and Fidelity each confirmed new programs allowing participants to invest a portion of their 401k in cryptocurrencies are underway.
Others predict that despite the FTX downfall, digital assets will continue to appear as investment options in 401ks in the near future. “Within the next two to three years, it’ll be your routine offering in 401ks around the country,” said Ric Edelman, the founder of the Digital Assets Council of Financial Professionals (DACFP) and the author of The Truth About Crypto, in a recent interview with 401k Specialist.
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
