Financial industry trade associations are calling on the Department of Labor (DOL) to withdraw recent guidance warning retirement plans to be cautious about adding cryptocurrency products to their investment menus.
In March, the agency’s Employee Benefits Security Administration issued a compliance assistance release that said plan fiduciaries should “exercise extreme care” when considering cryptocurrency investments.
“The plan fiduciaries responsible for overseeing such investment options or allowing such investments through brokerage windows should expect to be questioned about how they can square their actions with their duties of prudence and loyalty in light of the risks described above,” the release states.
In an April 12 letter, 11 financial industry interest groups wrote to the DOL asking that the agency withdraw the compliance release because it was issued outside of normal rulemaking. The organizations are concerned that the DOL was establishing policy while sidestepping the notice and comment process to obtain public input.
The interest groups stressed that they weren’t expressing an opinion on whether it’s appropriate to use cryptocurrency in retirement accounts. Their problem is with the way the DOL is addressing the issue, they said.
“[W]e are troubled by what we perceive to be a trend at EBSA away from rulemaking based on a robust notice and comment process, including review by the Office of Information and Regulatory Affairs (OIRA),” the groups wrote. “The Department’s new cryptocurrency position is inconsistent with current law and adopted retroactively without notice and comment or OIRA review.”
A DOL has said it did not introduce new policy in the crypto guidance but rather emphasized requirements that exist under federal retirement law, known as the Employee Retirement Income Security Act.
The groups signing the letter include the American Council of Life Insurers, the Insured Retirement Institute, the Investment Company Institute, the Securities Industry and Financial Markets Association and the U.S. Chamber of Commerce.
The interest groups argued that the use of the term “extreme care” in the compliance release creates confusion about fiduciaries’ legal standard. They also asserted that DOL should not weigh in on which investments are appropriate.
“We are not aware of any legal basis on which the Department can proceed down this path, and this would set a concerning precedent for future announcements by any Administration about what investments are permissible,” the letter states.