U.S. lawmakers urge Labor Department to drop crypto 401(k) proposal

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US lawmakers crypto 401(k) proposal

Highlights

Senator Bernie Sanders, Senator Elizabeth Warren, and Representative Bobby Scott urged Labor Secretary Keith Sonderling to rescind a proposal allowing digital assets and other alternatives in 401(k) plans.
The lawmakers argue the policy would expose $10.1 trillion in 401(k) accounts to volatile, weakly regulated crypto assets, raising fraud and investor protection concerns.
The proposal, announced in March, follows an August 2025 Trump executive order and faces criticism over conflicts of interest linked to Trump's family's crypto venture, World Liberty Financial.

Congressional challenge to retirement policy

As reported by the Senate Banking Committee and Cointelegraph, Senator Bernie Sanders, Senator Elizabeth Warren and Representative Bobby Scott called on acting Labor Secretary Keith Sonderling in a Tuesday letter to rescind a proposal that would allow private equity, digital assets, private credit and other alternative assets in 401(k) plans.

The lawmakers, who serve as ranking members on the Senate Banking Committee, the Senate Committee on Health, Education, Labor and Pensions, and the House Committee on Education and Workforce, say the policy would expose retirement accounts to highly volatile assets such as digital currency. In the letter, they cite what they describe as weak regulation and limited safeguards, arguing that many cryptocurrencies remain vulnerable to fraud.

They also say the current administration has weakened enforcement against crypto fraud at agencies including the Securities and Exchange Commission. The letter adds that the application of securities laws to crypto assets is still evolving, meaning protections commonly available to investors in public securities may not extend to digital tokens in the same way.

Political and market implications

The Labor Department proposal was announced in March and follows an August 2025 executive order from President Donald Trump directing federal agencies to democratize access to alternative assets, including crypto. Data from the Investment Company Institute show Americans held about $10.1 trillion in 401(k) plans as of Dec. 31, underscoring the scale of the potential policy impact.

Sanders, Warren and Scott also question whether the policy could financially benefit people in the current administration, pointing to what they describe as conflicts of interest tied to Trump's family's crypto venture, World Liberty Financial. Their objections echo broader Democratic concerns around digital asset legislation, including the CLARITY Act, where some senators say they will not support measures that do not include ethics provisions.

The dispute highlights a wider battle over how far crypto products should be integrated into mainstream retirement investing in the U.S. For retirement plan providers and asset managers, any shift in Labor Department policy could reshape product offerings, compliance expectations and political scrutiny across the savings industry.

Our earlier coverage focused on congressional Democrats urging the U.S. Department of Labor to withdraw a proposal that would open 401(k) plans to alternative assets such as private equity, private credit and digital assets. They argued the change could expose trillions in retirement savings to higher fees, greater complexity and increased volatility, potentially raising the risk of losses for older workers. The article also noted lawmakers’ concerns about possible conflicts of interest tied to the Trump family’s crypto venture.

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