In Compliance Help Launch No. 2022-01 (the “Launch”), the Division of Labor (the “Division”) signaled its intention to scrutinize inclusion of cryptocurrency property 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 through a brokerage window – could run opposite to ERISA’s fiduciary rules.
The Launch outlines the Division’s myriad considerations and highlights a Securities and Alternate Fee discovering that cryptocurrency is “extremely speculative.” The Division additionally signifies that the marketplace for crypto property may be risky and rife with fraud. Furthermore, the Division is anxious in regards to the means to precisely worth and recordkeep digital currencies. The Launch additionally means that the lure of cryptocurrency good points could mislead individuals into losses.
The Launch doesn’t carry the pressure of regulation, 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 obtainable via brokerage home windows. In all, the Launch supplies:
[The Department] expects to conduct an investigative program aimed 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 accountable for overseeing such funding choices or permitting such investments via brokerage home windows ought to anticipate 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 info, please see the Launch.