Senators Bernie Sanders and Elizabeth Warren, joined by Representative Bobby Scott, sent a letter to Acting Labor Secretary Keith Sonderling this week opposing a proposed rule that would allow 401(k) plans to include volatile assets like cryptocurrency, private equity, and private credit. The rule, which stems from an executive order President Trump signed in August 2024, would give fiduciaries cover to offer such assets if they can show they weighed relevant factors. The lawmakers argue it chips away at the Employee Retirement Income Security Act of 1974 and opens the door to risky investments for workers nearing retirement.
Why Democrats say the rule violates ERISA
The letter contends that the proposed rule conflicts with ERISA and Supreme Court precedent by shifting the prudence standard: instead of requiring fiduciaries to conduct rigorous due diligence, it would presume they acted prudently simply by following a process. That's a steep departure from decades of retirement law. The lawmakers frame it as an erosion of worker protections at a time when retirement security is already shaky for many Americans.
The administration's defense
Sonderling has defended the rule as an expansion of worker choice. Managers must evaluate offerings by following a prudent process, he said. Treasury Secretary Scott Bessent also backed the move, calling it part of President Trump's 'Golden Age.' But the letter from Sanders, Warren, and Scott suggests the Labor Department is moving too fast on a rule that benefits Wall Street and crypto promoters at the expense of everyday savers.
Real-world risks on the table
The pushback comes with a fresh set of warnings. FINRA has cautioned that crypto investments carry higher volatility and a significant risk of total loss. The FBI reported that cryptocurrency fraud losses topped $11 billion in 2025 alone. The Trump family crypto businesses — including World Liberty Financial's WLFI and USD1 tokens, plus the official Trump meme coin — raised about $5 billion, but that token's price history tells its own story: it surged to $75 then collapsed to roughly $2. For retirement savers, those swings could be devastating, especially for seniors: more than 22.8% of U.S. seniors live in poverty, compared to 5.1% in Denmark or 5.8% in France.
The next step
The Labor Department hasn't set a date for finalizing the rule. Sonderling now has a letter on his desk from three influential Democrats — and the clock is ticking on whether he'll address their concerns before pushing the rule through.
