Senators Bernie Sanders and Elizabeth Warren, along with Representative Robert Scott, sent a forceful letter to Acting Secretary of Labor Keith Sonderling on June 1, demanding the Department of Labor withdraw a proposed rule that would make it simpler for 401(k) retirement plans to hold alternative assets like cryptocurrencies. The lawmakers argued that the rule's "safe harbor" provision would erode long-standing fiduciary standards and expose millions of American workers to excessively risky and volatile investments.
The proposal, unveiled in March, was prompted by an executive order from President Donald Trump directing the agency to open a path for assets such as private equity, real estate, and digital assets within retirement accounts. Under the plan, 401(k) fiduciaries who follow certain steps when considering alternative investments would receive liability protection. Supporters say this would expand access to asset classes usually reserved for institutions, while critics warn it simply lowers the bar for unsuitable products.
In their 14-page letter, Sanders, Warren, and Scott claimed the rule violates the Employee Retirement Income Security Act (ERISA) and Supreme Court precedent by presuming prudence instead of requiring it. They also spotlighted crypto’s extreme price swings, citing the Trump memecoin’s crash from an all-time high above $73 to near $2, as proof that such tokens have no place in retirement savings. The lawmakers further referenced an FBI report that recorded over $11 billion in crypto-related fraud losses in 2025, a record, to stress the danger of normalizing digital assets in workplace plans.
The letter went beyond market volatility, charging that the proposal raises serious conflicts of interest for President Trump. It pointed to the Trump family’s reported $5 billion in paper wealth after the launch of the World Liberty Financial token (WLFI) and highlighted other Trump-linked assets, including the official Trump meme coin and the USD1 stablecoin. "The DOL’s proposed rule has the potential to boost the President’s bottom line at the expense of ordinary workers and retirees," the lawmakers wrote. They asked, "How can the American people trust regulations proposed by an Administration that conceivably stands to profit from them?"
The Department of Labor has not yet commented on the challenge. If enacted, even modest allocations from the $10 trillion 401(k) industry could channel hundreds of billions of dollars into crypto markets. A decision to reject or narrow the rule would signal that investor-protection concerns remain a formidable barrier to integrating digital assets into mainstream retirement planning.
