By: Micah Zimmerman
Compiled by: AididiaoJP, Foresight News
Sens. Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) are urging the Trump administration's Labor Department to repeal a rule that would open U.S. retirement savings accounts to Bitcoin and other cryptocurrencies. The lawmakers claim the move would jeopardize 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 Rep. Bobby Scott (D-VA), the ranking member of the House Education and the Workforce Committee, strongly condemned the rule proposed by the Labor Department in March.
The rule would provide fiduciaries of 401(k) plans with a safe harbor, allowing them to offer volatile assets—including cryptocurrencies, private equity, and private credit—as long as the fiduciary can demonstrate they have weighed relevant factors before offering them.
The letter states: 'The proposed rule is harmful to American workers and contrary to the law, congressional intent, existing regulations, and case law.'
What Impact Would the Rule Have
The proposal stems from an executive order signed by President Trump last August, which directed the Labor Department to revisit the treatment of alternative assets in retirement plans. Under current law, fiduciaries managing 401(k) plans must adhere to a strict 'prudent' standard—a requirement rooted in the 1974 Employee Retirement Income Security Act (ERISA) and reinforced by Supreme Court precedent.
The Democratic lawmakers argue the new rule would flip this standard. Fiduciaries would no longer need to prove they conducted due diligence; they would be presumed to have acted prudently as long as they followed the process outlined in the rule.
The lawmakers say this shift conflicts with decades of legal precedent and would expose the approximately $14.2 trillion in U.S. 401(k) accounts to assets subject to extreme price volatility and limited regulation.
The Financial Industry Regulatory Authority (FINRA) has warned that crypto investments 'exhibit higher volatility relative to traditional investment assets' and carry 'significant risk of losing the entire investment.' The FBI reported that cryptocurrency scam losses exceeded $11 billion in 2025, one of the highest loss categories among cybercrimes.
The Trump Conflict-of-Interest Argument
The Democratic lawmakers' criticism extends beyond retirement policy, directly pointing to conflict-of-interest concerns. Trump's adult children manage the family's crypto business, which, according to The Wall Street Journal, has raised about $5 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 surged above $75 around Trump's January 2025 inauguration before crashing to about $2.
The letter states: 'The above-described change to the prudent standard expands opportunities for President Trump and his family to profit at the expense of taxpayers, workers, and retirees.'
The consumer advocacy group Americans for Financial Reform expressed similar concerns. 'Opening 401(k)s to these products could turn workers' retirement savings into something resembling a Ponzi scheme, providing a lifeline to an industry in desperate need of fresh cash,' said Oscar Valdés Viera, a senior policy analyst at the group.
The letter also cites elderly poverty data: over 22.8% of seniors in the U.S. live in poverty, compared to 5.1% in Denmark, 5.8% in France, and 12.6% in Germany—highlighting the risk retirees cannot afford significant losses.
The Administration's Defense
The Trump administration describes the rule as an effort to expand workers' choices.
Acting Labor Secretary Sonderling said in a statement: 'The days of the Labor Department picking winners and losers are over. Our rule makes clear that fiduciaries must evaluate any potential product offering by following a prudent process.'
Treasury Secretary Scott Bessent also voiced support, calling the rule 'another step toward leading President Trump's ‘Golden Era’.'
