U.S. lawmakers seek to block Labor Department rule on crypto in 401(k) plans

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Lawmakers challenge crypto in 401k

Highlights

Sens. Bernie Sanders, Elizabeth Warren, and Rep. Bobby Scott urged the Labor Department on June 1 to withdraw a proposed rule allowing alternative investments, including crypto, in 401(k) plans.
Lawmakers cite cryptocurrency volatility and risk, spotlighting Trump's memecoin, which peaked above $73 and then fell to near $2 as of Tuesday.
The critics highlight a record crypto-linked fraud loss of more than $11 billion in 2025 and point to alleged conflicts of interest involving the Trump family.

Lawmakers challenge retirement investment proposal

As reported by The Block, Sens. Bernie Sanders and Elizabeth Warren, joined by Rep. Robert "Bobby" Scott, are urging the Department of Labor to withdraw the proposed rule in a June 1 letter to Acting Secretary of Labor Keith Sonderling. They argue the measure would create a safe harbor for fiduciaries offering alternative investments in retirement plans and weaken longstanding protections for savers.

The lawmakers say the proposal would encourage the use of riskier, more complex and more expensive assets in 401(k) plans. Their objections cover a range of alternative investments, but they place particular emphasis on cryptocurrencies because of sharp price swings and the difficulty ordinary retirement savers may face in assessing those risks.

Crypto volatility and conflict concerns

The Labor Department proposed the rule in March after President Donald Trump directed the agency in an executive order to pave the way for alternative assets in retirement plans. The framework outlines steps plan managers should take when considering whether to include assets such as private equity, real estate and digital assets in investment portfolios.

The critics also point to recent market and enforcement concerns around crypto. They cite volatility in Trump's memecoin, which they say rose above $73 at its peak and has since fallen to near $2 as of Tuesday, and they reference a Federal Bureau of Investigation report showing crypto-linked fraud losses reached a record more than $11 billion in 2025.

In addition, the lawmakers argue that conflicts of interest involving the Trump family could mean the proposed rule benefits the president financially while exposing workers and retirees to greater risk. The Department of Labor does not immediately respond to a request for comment.

Our earlier report on the CFTC moving to vacate its enforcement action against Gemini outlined how the regulator is reconsidering a January 2025 order tied to the Winklevoss-run exchange. The move was framed as part of a broader reset in U.S. crypto enforcement and a review of whether past cases treated industry participants as enforcement targets rather than supervised market actors.

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