US Senators Elizabeth Warren and Bernie Sanders, joined by Representative Bobby Scott, sent a 1 June letter to Acting Labor Secretary Keith Sonderling urging the Department of Labor to withdraw a proposed rule that would allow retirement plan fiduciaries to offer cryptocurrencies and alternative assets through 401(k) plans. The lawmakers argued the measure would weaken protections for workers' savings established under the Employee Retirement Income Security Act (ERISA). They contended the proposal creates a presumption that fiduciaries have acted prudently rather than requiring them to demonstrate prudence under existing standards, making it harder for retirement savers to challenge investment decisions. The letter comes as the Labor Department considers expanding the range of permissible investments in employer-sponsored retirement accounts beyond traditional stocks and bonds.
Proposed Rule Would Expand Investment Options in 401(k) Plans
The Department of Labor proposal would permit fiduciaries to consider a wider range of investments including digital assets, private equity, private credit, and certain annuity products. Under the framework, fiduciaries could receive greater protection from liability if they evaluate factors such as fees, liquidity, performance, and complexity before selecting investments.
Warren, Sanders, and Scott stated the proposal effectively creates a presumption that fiduciaries have acted prudently rather than requiring them to demonstrate prudence under standards established by ERISA and reinforced through court decisions. The lawmakers warned this could make it harder for retirement savers to challenge investment decisions.
FBI Reports US$11 Billion in Cryptocurrency Fraud Losses During 2025
The lawmakers described cryptocurrencies as highly volatile and pointed to research showing crypto investments available in retirement plans between 2021 and 2023 experienced substantially greater volatility than the S&P 500. They cited FBI figures reporting more than US$11 billion (AU$15.29 billion) in losses linked to cryptocurrency fraud during 2025.
In their letter, the lawmakers said the proposed changes could expose retirement savers to greater risks while benefiting the digital asset industry. They called on the Labor Department to abandon the proposal and retain existing fiduciary standards governing retirement plans.
FAQ
What did Warren and Sanders ask the Labor Department to do on 1 June?
Warren, Sanders, and Representative Bobby Scott sent a letter to Acting Labor Secretary Keith Sonderling asking the Department of Labor to withdraw a proposed rule that would make it easier for retirement plan fiduciaries to offer cryptocurrencies and other alternative assets through 401(k) plans.
Why do the lawmakers oppose the proposed 401(k) rule?
The lawmakers argued the proposal would weaken ERISA fiduciary standards by creating a presumption that fiduciaries have acted prudently rather than requiring them to demonstrate prudence. They stated this could make it harder for retirement savers to challenge investment decisions and expose them to greater risks from volatile digital assets.
How much cryptocurrency fraud did the FBI report during 2025?
The FBI reported more than US$11 billion (AU$15.29 billion) in losses linked to cryptocurrency fraud during 2025, according to figures cited in the lawmakers' letter.
