Original Author: Micah Zimmerman
Original Compilation: AididiaoJP, Foresight News
Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) have called on the Trump administration's Department of Labor to repeal a rule that would open U.S. retirement savings accounts to Bitcoin and other cryptocurrencies. The lawmakers argue this move would endanger workers' financial futures while allowing President Trump and his family to profit.
On Monday, the three Democrats sent a 14-page letter to Acting Labor Secretary Keith Sonderling. Sanders, Warren, and House Education and the Workforce Committee Ranking Member Bobby Scott (D-VA) strongly condemned the rule proposed by the Department of Labor in March.
The rule would provide fiduciary protections for 401(k) plan sponsors, allowing them to offer volatile assets—including cryptocurrencies, private equity, and private credit—as long as the fiduciaries can demonstrate they have weighed relevant factors before offering them.
The letter states: "The proposed rule is harmful to American workers and runs counter to the law, congressional intent, existing regulations, and case law."
What the Rule Would Do
This proposal stems from an executive order President Trump signed last August, directing the Department of Labor to reconsider the treatment of alternative assets in retirement plans. Under current law, fiduciaries managing 401(k) plans must adhere to a strict "prudence" standard—a requirement rooted in the 1974 Employee Retirement Income Security Act (ERISA) and reinforced by Supreme Court precedent.
Democratic lawmakers argue the new rule would flip this standard. Fiduciaries would no longer need to prove they conducted due diligence; instead, they would be presumed to have acted prudently as long as they followed the process outlined in the rule.
The lawmakers state this shift conflicts with decades of legal precedent and would expose roughly $14.2 trillion in U.S. 401(k) accounts to assets with extreme price volatility and limited regulation.
The Financial Industry Regulatory Authority (FINRA) has warned that crypto investments "exhibit higher volatility compared to traditional investment assets" and "pose a significantly higher risk of losing the entire investment." FBI reports indicate cryptocurrency scam losses exceeded $110 billion in 2025, one of the highest loss categories in cybercrime.
Trump Conflict of Interest Argument
The Democratic lawmakers' criticism extends beyond retirement policy, directly pointing to conflict of interest issues. Trump's adult children manage the family's crypto business, which, according to The Wall Street Journal, has raised approximately $50 billion for the Trump family since launching its digital currency last September.
The Trump family's crypto portfolio includes WLFI and USD1 tokens from World Liberty Financial, as well as the official Trump Meme Coin—which briefly surged above $75 around Trump's January 2025 inauguration before crashing to around $2.
The letter states: "The aforementioned change in the prudence standard expands opportunities for President Trump and his family to profit at the expense of taxpayers, workers, and retirees."
Consumer advocacy group Americans for Financial Reform expressed similar concerns. Its senior policy analyst, Oscar Valdés Viera, said: "Opening 401(k)s to these products could turn workers' retirement savings into a tool resembling a Ponzi scheme, providing a lifeline for an industry desperate for new funds."
The letter also cites elderly poverty data: Over 22.8% of American seniors live in poverty, compared to 5.1% in Denmark, 5.8% in France, and 12.6% in Germany—highlighting the risk retirees cannot afford to take significant losses.
The Administration's Defense
The Trump administration has described the rule as an effort to expand worker choice.
Acting Labor Secretary Sonderling said in a statement: "The days of the Department of Labor picking winners and losers are over. Our rule makes clear that managers must evaluate any potential product offering by following a prudent process."
Treasury Secretary Scott Bessent also expressed support, calling the rule "another step toward ushering in President Trump's 'Golden Age'."
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