Overview
- Senators Bernie Sanders and Elizabeth Warren have urged the Labor Department to withdraw a proposal that would facilitate the inclusion of cryptocurrencies and other alternative assets in 401(k) plans.
- The lawmakers contend that this rule undermines fiduciary responsibilities and may heighten risks for retirees.
- They also suggested that the policy could financially benefit former President Donald Trump and his family by broadening access to crypto products associated with them.
This week, Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) sent a strong letter to the acting head of the Labor Department, appointed by former President Donald Trump, urging a reconsideration of a proposed rule that would allow fiduciaries to include riskier assets like Bitcoin and other cryptocurrencies in retirement plans.
The proposed rule, introduced in March, would give fiduciaries the ability to offer volatile assets such as cryptocurrencies, private equity, and private credit in 401(k) plans, provided they claim to have considered various factors prior to doing so.
“This proposed rule is detrimental to American workers and conflicts with statutes, legislative intent, existing regulations, and case law,” stated Sanders and Warren in a detailed 14-page letter sent to Acting Labor Secretary Keith Sonderling. Representative Bobby Scott (D-VA), who leads the Democrats on the House Education and Labor Committee, also signed the letter.
The senators argued that the new regulations would assume due diligence from fiduciaries rather than mandate it, which they claim violates long-established requirements set by the Supreme Court and the 1974 Employee Retirement Income Security Act (ERISA).
Moreover, they asserted that relaxing standards in the $10 trillion retirement plan sector could directly benefit Trump by allowing digital assets linked to him and his family—such as World Liberty Financial’s WLFI and USD1, or the official Trump meme coin—to reach a significantly larger market.
“This adjustment to the prudence standard would create opportunities for President Trump and his family to gain at the expense of taxpayers, workers, and retirees,” the letter remarked.
A spokesperson for the Labor Department has not yet responded to a request for comments from Decrypt.
Trump initiated the Labor Department's proposal by signing an executive order last August, which instructed the agency to reassess its stance on alternative assets.
While Sanders and Warren voiced concerns about the overall weakening of retirement fiduciary standards, they particularly highlighted the inherent volatility of cryptocurrency investments and questioned the intentions of Trump and other crypto advocates who have endorsed this policy change.
“The DOL’s attempts to reduce protections that prevent retirement savings from being allocated to unstable and largely unregulated digital assets could jeopardize the savings of American workers and benefit the digital asset sector at the expense of retirement funds,” the lawmakers stated.
Analysts have projected that allowing American retirement accounts to engage with the crypto market could inject hundreds of billions of dollars into this sluggish sector over the medium term.