Sen. Bernie Sanders, Sen. Elizabeth Warren, and Rep. Robert Scott sent a June 1 letter to Acting Secretary of Labor Keith Sonderling. They urged the Department of Labor to reject a proposed rule that would ease inclusion of alternative assets, including cryptocurrencies, in 401(k) retirement plans. The lawmakers argued the rule would expose retirement savers to riskier, more complex, and more expensive investment products. The proposal was unveiled in March and followed an executive order from President Donald Trump directing the agency to clear a path for alternative assets inside retirement plans.
Lawmakers' Opposition to Proposed Rule
In their June 1 letter, the lawmakers warned that the proposed rule would establish a safe harbor for fiduciaries who offer alternative investments in retirement plans. "This would strip long-held investor protections from retirement savers and encourage the use of more risky, complex, and expensive investments," the lawmakers wrote. The proposal outlines steps 401(k) plan managers should take when considering private equity, real estate, digital assets, and other alternative investments.
Crypto Volatility and Fraud Concerns
The lawmakers pointed to the price history of Trump's memecoin as an example of crypto volatility. The token rose to an all-time high above $73 before falling closer to $2 as of Tuesday. The lawmakers cited a Federal Bureau of Investigation report showing crypto-linked fraud losses reached more than $11 billion in 2025, a record high. Their argument is that products with that kind of price behavior are difficult to justify inside retirement accounts used by ordinary workers.
Safe Harbor Mechanism and Fiduciary Liability
The proposed safe harbor is the key legal issue. A safe harbor can reduce liability risk for fiduciaries if they follow required steps when selecting and monitoring investments. The lawmakers see the mechanism as potentially lowering the practical barrier for including products that workers may not fully understand and that may carry higher fees, limited liquidity, and less transparent pricing than traditional public-market funds. The concern applies beyond crypto to private equity and real estate, which can also involve valuation gaps, lockups, leverage, and complex fee structures.
Conflict of Interest Allegations
The lawmakers raised concerns about potential conflicts of interest tied to the Trump family's crypto activity. They cited reporting that the family had amassed $5 billion in paper wealth after the launch of the World Liberty Financial token in 2025. "In the midst of these egregious conflicts, 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. "How can the American people trust regulations proposed by an Administration that conceivably stands to profit from them?"
FAQ
What did Democratic lawmakers ask the Department of Labor to do on June 1?
Sen. Bernie Sanders, Sen. Elizabeth Warren, and Rep. Robert Scott sent a June 1 letter to Acting Secretary of Labor Keith Sonderling asking the Department of Labor to reject a proposed rule that would make it easier for 401(k) retirement plans to include alternative assets, including cryptocurrencies.
Why did the lawmakers oppose the proposed 401(k) rule?
The lawmakers argued that the rule would expose retirement savers to riskier, more complex, and more expensive investment products. They cited crypto volatility, including Trump's memecoin falling from above $73 to closer to $2, and a Federal Bureau of Investigation report showing crypto-linked fraud losses reached more than $11 billion in 2025.
What conflict of interest concerns did the lawmakers raise?
The lawmakers cited reporting that the Trump family had amassed $5 billion in paper wealth after the launch of the World Liberty Financial token in 2025. They argued that the proposed rule could boost the President's bottom line at the expense of ordinary workers and retirees.
