Three members of Congress pushed back this week against a Labor Department proposal that would allow cryptocurrency investments inside 401(k) retirement plans. In a joint statement, the lawmakers argued that the volatility of digital assets and the lack of strong regulatory oversight could put Americans' retirement savings at risk. The pushback comes as the Labor Department weighs whether to relax guidance that has effectively barred most workplace retirement plans from holding crypto.
The Congressional objection
The lawmakers — whose names were not released in the public statement — specifically cited the sharp price swings common in crypto markets and the absence of investor protections akin to those for stocks and bonds. They said that workers saving for retirement shouldn't have to gamble their nest eggs on an asset class that can lose half its value in a week. The statement did not include a formal letter or bill, but it signals growing unease on Capitol Hill.
Why crypto and 401(k)s don't mix
401(k) plans are designed for long-term, relatively stable growth. Fiduciary rules require plan sponsors to act in the best interest of participants. The lawmakers argue that crypto's extreme volatility makes it hard to meet that standard. They also pointed to the lack of a clear regulatory framework — the SEC and CFTC have overlapping jurisdiction, and no single agency fully oversees crypto exchanges or stablecoins.
The Labor Department hasn't responded publicly to the lawmakers' statement. A formal comment period for the proposed guidance may open later this year. For now, the door to crypto in 401(k)s remains mostly shut — and the pushback from Congress makes it less likely to swing open anytime soon.
