D.C. Federal Court Judge Dismisses 401(k) Provider’s Challenge to DOL Cryptocurrency Guidance

A D.C. federal court judge dismissed a 401(k) provider’s lawsuit challenging the U.S. Department of Labor’s (DOL) guidance concerning cryptocurrency investments. In his ruling, the judge found that DOL guidance was not subject to judicial review, and the 401(k) provider lacked standing to file suit. However, the judge also found that the relief the 401(k) provider requested, or invalidation of the DOL guidance and an injunction preventing the DOL from enforcing it, would not redress the provider’s alleged injuries.

ForUsAll, a 401(k) provider, sued the DOL in June 2022, alleging that its Employee Benefits Security Administration (EBSA) violated the Administrative Procedure Act (APA) when it issued compliance assistance or guidance in March 2022 concerning cryptocurrency. The DOL warned employers in its guidance to use extreme caution in offering cryptocurrency investments through EBSA-regulated retirement plans. This warning was directed at self-directed brokerage accounts or 401(k) plan brokerage windows.

The judge acknowledged that ForUsAll had alleged plausible losses due to the DOL guidance, in that about one-third of all plans that discuss cryptocurrency investment options with the provider ultimately backed out due to DOL enforcement threats. However, the judge ruled that ForUsAll’s requested relief would not cure its alleged injuries. More specifically, the 401(k) plan provider could not prove that invalidating the DOL guidance would result in the retirement plans changing their minds and partnering with ForUsAll.

Furthermore, eliminating the DOL guidance would neither eliminate existing underlying ERISA fiduciary duties for the plans nor dispel DOL concerns about cryptocurrency investment options. The DOL guidance is also unnecessary for the agency to enforce its statutory authority under ERISA.

The case is ForUsAll Inc. v. U.S. Department of Labor et al., case number 1:22-cv-01551, U.S. District Court for the District of Columbia.

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