Two prominent Democratic lawmakers are urging the Labor Department to withdraw a proposed rule. If implemented, the proposal would make it easier for trustees of 401(k) plans to include Bitcoin, other crypto assets, and alternative assets such as private equity and private credit in their retirement account investment options.
Bernie Sanders and Elizabeth Warren wrote to Acting Labor Secretary Keith Sonderling this week, arguing that the rule would weaken long-standing fiduciary standards and put American retirement savings at greater risk. Representative Bobby Scott, the ranking Democrat on the House Education and Labor Committee, also co-signed the letter.
Lawmakers oppose relaxing prudential standards
According to the proposal put forward in March of this year, trustees could have greater leeway if they stated that they had considered multiple factors before providing the relevant assets. Lawmakers argue that this effectively turns "proving prudence" into "assuming prudence has been done," which is inconsistent with the existing legal framework.
The two pointed out that the US retirement plan is worth approximately $10 trillion. Relaxing standards within this system could make it easier for volatile assets with limited information disclosure to enter the long-term retirement portfolios of ordinary investors.
Encrypted products become the focus of debate
In the letter, the lawmakers listed Bitcoin and other digital assets as one of their main concerns, arguing that the prices of these assets are highly volatile and that regulation is still insufficient, making them unsuitable for widespread access to ordinary depositors through retirement accounts.
They also stated that if the rules are implemented, they could expand the potential sales of crypto products associated with Trump and his family, including World Liberty Financial's WLFI, USD1, and Trump's official Meme coin. Lawmakers believe this would raise issues of conflict of interest.
The proposal was paved by an executive order.
The report indicates that this rule change is related to an executive order signed by Trump last August. That order required the Department of Labor to reassess its treatment of alternative assets, paving the way for subsequent proposals.
Supporters believe that if US retirement accounts have wider access to the crypto market in the future, it could bring substantial new funding to the industry. Some analysts estimate that the amount of related funds could reach hundreds of billions of dollars in the medium term.
However, as of the time of publication, the Department of Labor had not yet responded to the letter from lawmakers. The core of the current controversy remains whether pension trustees should continue to bear strict due diligence obligations when introducing highly volatile assets.
