EBSA 401(k) Guidelines: Keep Cryptography Away

Hello and welcome to Protocol Fintech. This Monday: Bitcoin hurdles in your 401(k), Coinbase turmoil, and Grayscale’s battle plan.

out of the chain

The question isn’t whether it’s crypto winter, it’s whether your down vest will be enough to get you through it. Unless you’re Michael Sonnenshein from Grayscale, who told my colleague Ben Pimentel this was an open question. Galaxy Digital’s Mike Novogratz, who now says his luna tattoo is a reminder to avoid hubris, is more bearish, say crypto markets may have to wait until Q4 for the Fed to relax.

—Owen Thomas (E-mail | Twitter)

Crypto is a long way from retirement

You would think that the last thing people would want to bet on in retirement now is crypto, given the fall in digital asset prices. The Ministry of Labor has clearly expressed its opinion, narrative plan providers in March to exercise “extreme caution” before including crypto in their retirement plans. But Fidelity, a big player in the 401(k) world, and ForUsAll, a roughly 10-year-old startup, are diving ahead. ForUsAll actually sued the department for its advice.

The Department of Labor didn’t mince words in its crypto warning. Cryptocurrencies, he said, pose “significant risks of fraud, theft and loss.” And that was before the collapse of the UST!

  • The Employee Benefits Security Administration detailed Labor’s case against cryptocurrencies: Speculative and volatile investments hurt participants nearing retirement. Even the experts are struggling to agree on a way to value them. The risk of hacking poses custodial issues.
  • On top of that, the agency pointed out, is the changing regulatory environment, which means trustees will need to carefully monitor state and federal rules to protect plan participants. (Ironically, perhaps, because the Department of Labor is partly responsible for fueling this uncertainty!)
  • The agency has pledged to investigate all plans offering cryptocurrency.

Fidelity and ForUsAll argue that the agency overstepped its investigation warnings. Both challenge the direction.

  • ForUsAll took the strongest step by filing a lawsuit arguing that the department violated the Administrative Procedure Act. He complained that the EBSA imposed an “extra care” standard for cryptocurrencies that differed from other asset classes.
  • Dave Gray of Fidelity urged the department to reconsider the guidelines for a variety of reasons, including its merger of bitcoin with less widely traded cryptocurrencies. The agency, he wrote, did not clearly define which investments its guidelines applied to, and he also objected to the “extreme care” standard. ERISA, the law under which the Department of Labor regulates workplace pension plans, already requires trustees to assess whether investment options are prudent and does not allow the Department to make its own judgments, wrote Grey.
  • ForUsAll has implemented guardrails for crypto investments in the design of its plan. It limits crypto to 5% of a portfolio and also caps the allocation of crypto in ongoing contributions to 5%. Fidelity, so far, is working with MicroStrategy, a software company specializing in bitcoin investing, to offer bitcoins to its employees in retirement accounts; they can allocate up to 20% of the savings to bitcoin.

Regulatory clarity can take some time. The new Lummis-Gillibrand crypto bill only indirectly addresses crypto in retirement accounts.

  • The Responsible Financial Innovation Act asks the Comptroller General to study “retirement investing in digital assets” and deliver a report by March 2023.
  • President Biden’s executive order on crypto is also vague on the matter.
  • Senator Tommy Tuberville introduced the Financial Freedom Act in May. It explicitly allows plans to offer crypto through self-managed investment options.

Arguments over crypto in pensions reflect broader disagreements over the asset class. Ric Edelman, financial advisor and author of “The Truth About Crypto”, compared bitcoin to Model T in an interview with MarketWatch, and denounced the “unwarranted paternalistic attitude” of the Department of Labor. But whether you are a bitcoin maxi or a crypto skeptic may be irrelevant. As Wendy Von Wald, fiduciary product manager at Travelers, underline, “trustees must act in the best interests of plan participants”. Until it’s clear that the crypto supply fits this bill, the legal uncertainty may be enough to keep most retirees from following Fidelity and ForUsAll down the crypto path.

— Leah Zitter (E-mail | Twitter)


Discover a new, one-of-a-kind service launched on the Stellar network to bridge the gap between the physical and digital world. This will pave the way for blockchain as a tool to foster financial inclusion by creating fluidity to transfer money to crypto, so that more people benefit from the digital economy.

Learn more

on the money

On protocol: The CFPB investigates “employer debt“, consumer debt incurred at work to pay for necessary equipment and training. The survey comes at a time when companies are increasingly offering different financing products to their employees, often in partnership with fintech companies.

Mastercard brings its networks to NFTs. In a expansion in the Web3 space, the payments giant has partnered with Immutable X, Candy Digital, The Sandbox, Mintable, Spring, Nifty Gateway and MoonPay to allow consumers to use their Mastercard to purchase NFTs.

Also on Protocol: Grayscale is ready for a potential legal tussle with the SEC over its bitcoin spot ETF application, CEO Michael Sonnenshein told Protocol. With a new top legal recruit, Grayscale is preparing for any type of enforcement outcome.

The Stellar-MoneyGram deal could help you put your money in crypto. Consumers without a bank account or credit card can now bring fiat to a MoneyGram location to convert it to crypto, and vice versa.

Revolut sends USD transfers to the UK at no cost to businesses. Business customers can now receive USD payments up to $1 million through the automated clearinghouse network, a move allowing foreign transfers without using SWIFT, although that network remains an option.

Troubles at Coinbase

Employees are pushing Coinbase to remove three top executives for actions “that led to questionable results,” according to a now-deleted petition that was first posted on Mirror.xyz. CEO Brian Armstrong said on Friday that the requests were “really dumb on so many levels.”

The petition, titled “Operation Revive COIN,” called for Chief Operating Officer Emilie Choi, Chief Product Officer Surojit Chatterjee, and Chief Human Resources Officer LJ Brock to be fired from Coinbase. Employees listed eight plans they believe were executed under the direction of these executives, including Coinbase’s troubled NFT market; the decision to cancel new job offers; and a reverse push since to hire thousands of roles “despite being an unsustainable plan and contrary to crypto industry wisdom.”

Employees also alleged a “generally apathetic and sometimes condescending attitude” on the part of the three executives and wrote that the company had been unable to offer “better or better products and services” despite hiring more employees.

Read the full story on Protocol.com.

—Sarah Roach (E-mail | Twitter)


The Fintech South conference begins on Tuesday. Both days an event will take place in Atlanta at the Georgia World Congress Center. Speakers include Jamila Abston, partner at EY, Cameron Bready, president of Global Payments, and Apple’s Cherie Fuzzell. (That name sounds familiar.)

The Generations 2022 conference also kicks off on Tuesday. Both days conference will be held in Charlotte, NC with speakers from Credit Karma, The Clearing House, Oracle and others.

The Invest 2022 conference begins on Thursday. Both days conference will be held at the Hilton Midtown in New York and will feature speakers from Fidelity, Citibank, JP Morgan and others.


On Stellar, wallets and fintechs can enable their users to easily convert digital assets to cash or cash to digital assets in thousands of participating sites in a growing list of countries around the world. Begin.

Learn more

Thanks for reading – see you tomorrow!

Previous Thongchai Jaidee wins in Wisconsin, first Champ Thai winner
Next Jeju Dream Tower Casino to Welcome First Overseas Visitors This Week