Joint Letter to DOL on 401(k) Plan Investments in Cryptocurrencies

The Honorable Ali Khawar
Acting Assistant Secretary
Department of Labor
200 Constitution Ave NW
Suite N-5677
Washington, DC 20210

Dear Acting Assistant Secretary Khawar:

The undersigned organizations write with regard to Compliance Assistance Release (“CAR”) 2022-01, issued by the Employee Benefits Security Administration (“EBSA”) on March 10, 2022. As you know, the subject of the CAR is “401(k) Plan Investments in ‘Cryptocurrencies.’”

First, we wish to share that we have greatly appreciated the openness of EBSA to have informal listening sessions with stakeholders on a broad range of issues. This openness has been very helpful and has underscored EBSA’s dedication to improving the retirement system. We thank you for that. It is in the context of this openness that we write to you about CAR 2022-01 and ask respectfully that this release be withdrawn and that the Department instead develop guidance in this area through notice-and-comment rulemaking.

Please note that, at this time, we express no view on the appropriateness of retirement plan investments in cryptocurrency. Rather, as described herein, we 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”). We are very aware that the line between helpful sub-regulatory guidance and indirect rulemaking is not a clear one. But we respectfully suggest that recent sub-regulatory guidance has been more in the nature of rulemaking in need of notice and comment and OIRA review, such as with respect to recent best practices guidance, as discussed below.

We believe that this trend is not helpful to the retirement system. Not using the notice-and-comment process can undermine the quality of guidance issued, causing fiduciaries to try to apply wording found in sub-regulatory guidance that has not been informed by input from the regulated community regarding how a proposed standard, as written, might be confusing or hard to administer--or even contrary to the interest of plan participants (i.e., have an unintended effect). Moreover, we believe that this trend is inconsistent with the Administrative Procedure Act’s (“APA”) requirements regarding notice and comment and with the Administration’s requirements regarding OIRA review.

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