Key Takeaways:
Senators Bernie Sanders and Elizabeth Warren urged the Labor Department to drop a proposed rule that would let fiduciaries offer Bitcoin and other cryptocurrencies in 401(k) plans, arguing it weakens protections for the nation's $10 trillion retirement industry.
"The proposed rule is harmful to American workers and counter to statute, Congressional intent, existing regulations, and case law," the lawmakers said in a 14-page letter sent Monday to Acting Labor Secretary Keith Sonderling. Representative Bobby Scott (D-VA), the top Democrat on the House Education and Labor Committee, also signed the letter.
The rule, floated in March, would grant fiduciaries immunity to offer volatile and opaque assets including crypto, private equity and private credit in retirement plans, provided they stipulate they considered various factors before offering access. Sanders and Warren argued the change would presume due diligence on the part of fiduciaries rather than require it, violating standards established by the Supreme Court and the 1974 Employee Retirement Income Security Act.
The lawmakers further claimed the weakened standards could directly benefit President Donald Trump by exposing digital assets tied to him and his family — including World Liberty Financial's WLFI and USD1 tokens, and the official Trump meme coin — to a much larger pool of retirement capital. Analysts have estimated that opening the $10 trillion retirement market to crypto could channel hundreds of billions of dollars into the sector over the medium term.
Trump paved the way for the Labor Department proposal by signing an executive order last August directing the agency to reevaluate its approach to alternative assets. The policy shift has drawn celebration from crypto entrepreneurs, though Sanders and Warren questioned those motives.
"The DOL's efforts to weaken safeguards that deter retirement saving funds from being invested into volatile and largely unregulated digital assets would jeopardize Americans' hard earned income and benefit the digital asset industry at the cost of Americans' retirement savings," the lawmakers wrote.
A representative for the Labor Department did not immediately respond to a request for comment.
The pushback from two of the Senate's most prominent progressives adds a significant political hurdle to a rule that would mark one of the most consequential expansions of crypto access in US retirement markets. If implemented, the policy would represent a sharp reversal from the Labor Department's stance under the Biden administration, which had warned fiduciaries against including crypto in 401(k) plans because of volatility and valuation concerns.
The comment period for the proposed rule remains open, giving industry groups and consumer advocates time to weigh in before any final action.
This article is for informational purposes only and does not constitute investment advice.
