Bloomberg Law
June 2, 2022, 2:18 PMUpdated: June 2, 2022, 7:32 PM

ForUsAll Launches First Crypto Guidance Lawsuit Against DOL (1)

Austin R. Ramsey
Austin R. Ramsey

The US Labor Department is being called to task in federal court for its recent strongly worded guidance advising 401(k) plans against cryptocurrency investments.

San Francisco-based plan provider ForUsAll Inc. filed a lawsuit against the department Thursday, claiming regulators breached their statutory purview by threatening “an investigative program” aimed at plan sponsors that offer digital assets through their core plan lineup or self-directed brokerage accounts.

The complaint, filed in the US District Court for the District of Columbia, claims the DOL violated the Administrative Procedure Act (Pub.L. 79–404) by arbitrarily and capriciously instituting what amounts to a ban on cryptocurrency investments without conducting a formal notice-and-comment rulemaking process.

The department is acting the role of “armchair financial adviser” by issuing subregulatory guidance (CAR No. 2022-01) that effectively prohibits an entire asset class, ForUsAll CEO Jeff Schulte told Bloomberg Law Thursday.

By implicating self-directed brokerage accounts—or brokerage windows—in the guidance, DOL broke with decades of precedent that has let plan sponsors off the hook for monitoring investments participants choose themselves, he added.

“When the federal government says that they’re starting an investigatory program, and that any small business owner that decides to make cryptocurrency available—even through a self-directed brokerage account—should expect to be questioned, they’re attempting to effect a ban,” Schulte said.

Crypto Craze

ForUsAll last year became one of the first plan administrators to offer workers direct access to crypto holdings through their qualified retirement accounts. The company partners with digital currency exchange platform Coinbase Global Inc. to offer an in-plan brokerage window allowing workers to transfer up to 5% of their savings into more than 50 different cryptocurrencies.

Since then, Fidelity Investments Inc. has gone head-to-head against the Labor Department, announcing the release of its own crypto product for 401(k) investors just weeks after the department’s guidance was released.

It’s ultimately up to plan sponsors to adopt crypto plan features. So far, about 30% of ForUsAll’s 500 clients have made that decision, the company said. Most of those newly crypto-friendly plans are relatively small in the world of 401(k) plans, holding, on average,160 workers’ assets totaling about $3 million each.

The Employee Retirement Income Security Act (Pub.L. 93-406) holds plan sponsors to a strict fiduciary standard of care when choosing investment options. Individual plans and not service providers such as ForUsAll would be subject to any future enforcement action.

“We’ve spoken to a number of our customers subsequent to the Department of Labor’s release, and a number of them have expressed concern about the threat of investigations—the potential for harassment from the Department of Labor—and they’ve chosen to not roll out the feature at this moment,” Schulte said.

ForUsAll wants the district court to vacate the Labor Department guidance and enjoin the officials from enforcing it.

ForUsAll, Fidelity and at least 10 trade organizations representing plan sponsors and retirement funds have publicly called on the Labor Department to revoke its guidance.

‘Freedom to Choose’

Cryptocurrency can “level the playing field” between workplace retirement savers and wealthy institutional investors, Schulte said Thursday.

“We think it’s extremely important that everyday Americans have the freedom to choose how they see best, and the self-directed brokerage account has been ,for decades, a trusted tool for doing just that,” he said. “The Department of Labor’s overreach we think sets a troubling precedent, just because they don’t like cryptocurrency.”

The Labor Department didn’t immediately respond to a request for comment Thursday. Acting Assistant Secretary for Employee Benefits Ali Khawar has said his agency’s guidance isn’t a ban on cryptocurrency, nor does it change longstanding procedural guidance and regulations regarding brokerage windows.

The guidance wasn’t intended as a “backdoor way to regulate brokerage windows in a whole new way,” Khawar told Bloomberg Law last month.

The agency’s crypto guidance warns sponsors that cryptocurrency investments are volatile and difficult to accurately value in the market. Even seasoned investors may have limited knowledge or experience trading digital coins, making it difficult to “separate the facts from the hype,” Khawar said.

Causes of Action: Failure to engage in notice-and-comment rulemaking and arbitrary and capricious action under the Administrative Procedure Act.

Relief: Declaration of legal breach, revocation of Labor Department guidance, injunction blocking regulators from enforcing the guidance, declaration that the department’s investigatory authority is limited to violations of Title I of the Employee Retirement Income Security Act, and attorneys’ fees.

Response: The DOL didn’t immediately respond to a request for comment.

Attorneys: Groom Law Group Chartered represents the plaintiff.

The case is ForUsAll, Inc. v. U.S. Dep’t of Labor et al., D.D.C., No. 1:22-cv-01551, complaint 6/2/22

(Updated with additional reporting throughout. )

To contact the reporter on this story: Austin R. Ramsey in Washington at

To contact the editor responsible for this story: Martha Mueller Neff at; Jo-el J. Meyer at