Warren and Sanders move to kill the rule opening 401(k)s to crypto

Senators Elizabeth Warren (@ewarren) and Bernie Sanders (@BernieSanders) are pressing the @USDOL to scrap a proposed rule that would make it easier for 401(k) plan managers to include crypto and other alternative assets in retirement menus. The two senators argue the rule strips protections from savers and pushes them toward riskier, higher-cost products.

What the Rule Actually Does

The proposal, published by the Labor Department on March 30, is more limited than critics suggest. It creates a process-based safe harbor for retirement plan fiduciaries who add alternative investments, including cryptocurrencies, to 401(k) plan menus. Crucially, the Labor Department proposal does not require retirement plans to offer crypto exposure. It would clarify that fiduciaries may consider such investments if they conclude they meet ERISA's prudence requirements.

The core problem the rule targets is litigation risk, not legal prohibition. Retirement plan fiduciaries are not currently barred from including crypto or other alternative assets in 401(k) lineups. The barrier is litigation risk. Under ERISA, fiduciaries who make investment decisions that result in losses can be held personally liable. Under the proposed rule, when selecting investment alternatives, plan fiduciaries would need to objectively, thoroughly, and analytically consider factors including performance, fees, liquidity, valuation, performance benchmarks, and complexity.

The rule follows an executive order from President Trump directing federal agencies to expand retirement access to alternative assets. Last May, the Labor Department rescinded prior guidance that urged fiduciaries to exercise "extreme care" before adding crypto to retirement plans. Trump's executive order went further, calling for digital assets to be treated on par with other investment options.

The Political and Industry Battle Lines

Warren has been among the rule's most vocal opponents. She pointed to research from the U.S. Government Accountability Office finding that crypto assets have "unique volatility" and lack reliable methods for forecasting returns, and noted that Bitcoin swung from more than $126,000 at its October 2025 peak to roughly $70,000 by early February 2026.

The crypto industry is pushing back. The Blockchain Association said the proposed rule reinforces a long-standing principle of ERISA: that fiduciaries should assess investments through a prudent decision-making process rather than by favoring or excluding specific asset classes. Americans saving for retirement should not be blocked from access to digital asset investment options simply because the asset class is crypto-related, the group argued in a comment letter submitted to the DOL on June 1.

Even some legal experts are skeptical about the rule's near-term impact. "We remain skeptical that this will encourage fiduciaries to include alternatives in 401(k) plans until the courts have concurred that this language protects advisors from litigation," said Jaret Seiberg, financial services and housing policy analyst at TD Cowen, adding that "it could be several years before we see the real impact." More than 90 million Americans hold accounts covered by the proposal.

Sources:
U.S. Department of Labor: Proposed Rule on Fiduciary Duties in Selecting Designated Investment Alternatives
CoinDesk: U.S. Rule Change May Open Trillions in 401(k) Funds to Crypto
CNBC: 401(k) Alternative Asset Rule Proposed by Labor Department