“401(k) Crypto Case Crumbles in Federal Court”

[Peter Gulia]

The Bakers helpfully pointed us to Nevin Adams’ alliteratively titled article on a court’s decision that ForUsAll, Inc. can’t sue the U.S. Labor department about EBSA’s “Compliance Assistance Release” about “cryptocurrencies”.

https://www.napa-net.org/news-info/daily-news/401k-crypto-case-crumbles-federal-court;

https://www.napa-net.org/sites/napa-net.org/files/ForUsAll%20Inc.%20v.%20U.S.%20Department%20of%20Labor%20et%20al_082923.pdf;

https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/compliance-assistance-releases/2022-01.pdf.

Judge Christopher Reid Cooper finds that, even if the Employee Benefits Security Administration acted contrary to law by issuing its nonrule document, ordering the Release to be treated legally as a nothing would not relieve the harm ForUsAll asserts because prospective customers would still face the same risks about investigations and enforcement.

Also, the opinion finds that courts do not review a Federal government agency’s nonrule document if it sets no legal right or duty, and no legal consequence flows from the document. The judge found EBSA’s Compliance Release was “informational” and does not compel anyone to do anything. Rather, it suggests fiduciaries “be prepared to explain how [their] actions comport with their duties of prudence and loyalty—whatever those duties are.”

The opinion observes that the law is unsettled about what responsibility a plan’s fiduciary might have regarding an account that is not a designated investment alternative.

[Peenionved]

On 8/31/2023 at 11:09 PM, Peter Gulia said:

The Bakers helpfully pointed us to Nevin Adams’ alliteratively titled article on a court’s decision that ForUsAll, Inc. can’t sue the U.S. Labor department about EBSA’s “Compliance Assistance Release” about “cryptocurrencies”.

https://www.napa-net.org/news-info/daily-news/401k-crypto-case-crumbles-federal-court;

https://www.napa-net.org/sites/napa-net.org/files/ForUsAll%20Inc.%20v.%20U.S.%20Department%20of%20Labor%20et%20al_082923.pdf;

https://www.dol.gov/sites/dolgov/files/ebsa/employers-and-advisers/plan-administration-and-compliance/compliance-assistance-releases/2022-01.pdf.

Judge Christopher Reid Cooper finds that, even if the Employee Benefits Security Administration acted contrary to law by issuing its nonrule document, ordering the Release to be treated legally as a nothing would not relieve the harm ForUsAll asserts because prospective customers would still face the same risks about investigations and enforcement.

Also, the opinion finds that courts do not review a Federal government agency’s nonrule document if it sets no legal right or duty, and no legal consequence flows from the document. The judge found EBSA’s Compliance Release was “informational” and does not compel anyone to do anything. Rather, it suggests fiduciaries “be prepared to explain how [their] actions comport with their duties of prudence and loyalty—whatever those duties are.”

The opinion observes that the law is unsettled about what responsibility a plan’s fiduciary might have regarding an account that is not a designated investment alternative.

I too have started to develop in the cryptocurrency sphere and recently turned to the learn.binany.com resource to learn how to trade crypto. There is a lot of useful information there that helps to understand the basics and understand the intricacies of trading. As for storing cryptocurrencies, in my opinion, it is important to choose the right wallet - for example, a hardware wallet for long-term storage or a mobile/online wallet for more frequent use.

This case brings up some interesting points regarding the legal landscape of cryptocurrencies in the context of retirement plans. Judge Cooper’s ruling clarifies that the EBSA’s "Compliance Assistance Release" is essentially an informational document and doesn't carry legal weight in terms of enforcing specific actions. The fact that it doesn’t create any new legal obligations means that the potential harm ForUsAll claimed wasn’t sufficient to warrant a lawsuit.

The issue of fiduciary responsibility for crypto investments in retirement plans is still very much up in the air, and this case reflects the ongoing uncertainty about how fiduciaries should navigate emerging assets like cryptocurrencies. It’ll be interesting to see how this develops in future cases, especially as the industry grows and more questions arise around compliance and regulation.

 

[david rigby]

"Cryptocurrency" is NOT currency.

[Bri]

It's like a collectible!