Sanders, Warren Urge Labor to Drop Crypto 401(k) Rule

On Monday, Senators Bernie Sanders (I-Vt.) and Elizabeth Warren (D-Mass.) asked Acting Labor Secretary Keith Sonderling to withdraw a 14-page proposed rule from March that would make it easier for employers and plan managers to offer cryptocurrencies and other alternative assets in 401(k) plans.

In their letter, the lawmakers argued the proposal would lower the standard of prudence for plan fiduciaries by allowing investments such as Bitcoin, private equity and private credit if fiduciaries document certain factors. The letter argues the rule treats prudence as presumed rather than required and conflicts with the 1974 Employee Retirement Income Security Act and Supreme Court precedent.

“The proposed rule is harmful to American workers and counter to statute, Congressional intent, existing regulations, and case law,” the letter states. The senators said loosening the prudence standard in the roughly $10 trillion retirement plan industry would expose workers and retirees to greater risk and reduce long-standing protections for plan participants.

The lawmakers also warned the rule could expand the market for digital assets linked to President Donald Trump and his associates, citing tokens such as World Liberty Financial’s WLFI and USD1 and an official Trump meme coin. “The change to the prudence standard described above expands opportunities for President Trump and his family to profit at the expense of taxpayers, workers and retirees,” the letter reads.

Representative Bobby Scott, the top Democrat on the House Education and Labor Committee, also signed the correspondence.

The senators highlighted the volatility and limited regulation of many digital assets. “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.

The proposal follows an executive order the president signed last August directing the Labor Department to reassess its approach to alternative assets. Proponents of the rule say broader investment options could modernize plans and potentially improve returns. Some analysts estimate permitting crypto in retirement accounts could channel hundreds of billions of dollars into the digital asset market over the medium term. Opponents say greater access could introduce speculative money into retirement accounts and place pressure on fiduciaries to include novel products without adequate protections.

The letter also notes commercial activity tied to Trump-associated tokens, including gatherings for token holders organized by longtime Trump associate Bill Zanker, who has promoted benefits for top holders.

Sanders and Warren requested the department halt implementation of the proposed rule and retain existing fiduciary standards that require demonstrable prudence before plan assets are placed in higher-risk investments. The Labor Department did not immediately respond to requests for comment.