In Compliance Assistance Release No. 2022-01 (the “Launch”), the Division of Labor (the “Division”) signaled its intention to scrutinize inclusion of cryptocurrency belongings and crypto-derivative merchandise as investments in ERISA-covered retirement plans. Particularly, the Launch articulates the Division’s view that providing publicity to this asset class – both in a plan’s funding lineup or by way of a brokerage window – could run opposite to ERISA’s fiduciary rules.
The Launch outlines the Division’s myriad issues and highlights a Securities and Trade Fee discovering that cryptocurrency is “extremely speculative.” The Division additionally signifies that the marketplace for crypto belongings will be unstable and rife with fraud. Furthermore, the Division is worried in regards to the means to precisely worth and recordkeep digital currencies. The Launch additionally means that the lure of cryptocurrency positive factors could mislead individuals into losses.
The Launch doesn’t carry the power of legislation, though it heralds an unprecedented shift in Division enforcement in opposition to a complete asset class. The Division additionally indicated that its investigations would come with funding choices accessible by way of brokerage home windows. In all, the Launch gives:
[The Department] expects to conduct an investigative program geared toward plans that supply participant investments in cryptocurrencies and associated merchandise, and to take applicable motion to guard the pursuits of plan individuals and beneficiaries with respect to those investments. The plan fiduciaries answerable for overseeing such funding choices or permitting such investments by way of brokerage home windows ought to count on to be questioned about how they will sq. their actions with their duties of prudence and loyalty in gentle of the dangers described [by the Release].
For extra data, please see the Release.