Three of Congress's most senior Democratic lawmakers are pushing back hard against a proposed rule that would open 401(k) retirement plans to crypto. In a letter dated June 1 to Acting Labor
Three of Congress's most senior Democratic lawmakers are pushing back hard against a proposed rule that would open 401(k) retirement plans to crypto.
In a letter dated June 1 to Acting Labor Secretary Keith Sonderling, Senators Bernie Sanders and Elizabeth Warren, along with Representative Robert "Bobby" Scott, the ranking member of the House Committee on Education and Workforce, called on the Department of Labor to scrap its proposed Fiduciary Duties in Selecting Designated Investment Alternatives rule entirely.
"The proposed rule is harmful to American workers and counter to statute, Congressional intent, existing regulations, and case law," the letter warned.
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The Labor Department proposed the rule on March 30, after President Donald Trump signed an executive order directing the agency to clear the way for alternative assets in retirement plans.
The rule would create a safe harbor for fiduciaries who offer alternative investments inside 401(k)s, including digital assets, private equity, private credit, real estate, and annuities.
The Labor Department framed it as a move to "democratize access" to investments that have largely been off-limits to ordinary retirement savers.
Under the framework, a fiduciary clears the safe harbor by showing it weighed six factors: performance, fees, liquidity, valuation, benchmarks, and complexity.
Sanders and Warren argue the proposal strips decades of investor protections from retirement savers and waters down fiduciary oversight into a "check-the-box exercise."
They say a process that is satisfied simply by demonstrating those six factors were considered falls far short of the rigorous prudence analysis the Employee Retirement Income Security Act requires.
For context, 401(k) plans hold trillions of dollars in retirement savings for tens of millions of American workers, so a change to how fiduciaries vet what goes into them reaches well beyond crypto.
The lawmakers' sharpest concerns are also about cryptocurrency.
The letter cites a Government Accountability Office study finding that between 2021 and 2023, crypto assets in 401(k) plans were far more volatile than the S&P 500, ranging from roughly four times more volatile for Bitcoin to twelve times more volatile for Solana.
The letter also points to the Labor Department's own assistant secretary, who told a House committee in April that he was not sure any current crypto product could even meet the proposed standard for inclusion in a plan.
The lawmakers also tied the rule to the administration's own crypto interests, noting the Trump family has built up as much as $5 billion in paper wealth tied to crypto since the start of the administration.
"The Trump Administration is rife with conflicts of interest in this area, which leaves us with genuine questions about whether any Administration official may financially gain from this proposal."
Letter from Sens. Sanders and Warren and Rep. Scott
The letter landed on the same day the rule's 60-day public comment period closed, June 1. The Labor Department will now review the comments before deciding whether to finalize, revise, or drop the rule.
