Democratic lawmakers are pushing back against a Department of Labor proposal that would allow 401(k) retirement plans to invest in cryptocurrency, private credit, and private equity, arguing the change would strip investor protections from an estimated $14.2 trillion in retirement savings. In a letter shared exclusively with the Guardian, Senator Bernie Sanders, Senator Elizabeth Warren, and House education and workforce committee ranking member Bobby Scott of Virginia said the rule would expose workers to riskier, more complex investments and would probably not survive a legal challenge.
“This would strip long-held investor protections from retirement savers and encourage the use of more risky, complex, and expensive investments,” the letter stated. “The proposed rule is harmful to American workers.”
The Democrats pointed to the volatility of Trump’s own memecoin, which surged to over $75 per token during his inauguration in January 2025 but has since fallen to around $2. The letter also noted that more than 22.8% of seniors in the U.S. live in poverty, according to OECD data, compared with far lower rates in other developed countries such as Denmark (5.1%), France (5.8%), Germany (12.6%), and Canada (14.8%).
Consumer advocates echoed the concerns. Oscar Valdés Viera, a senior policy analyst at Americans for Financial Reform, said in a statement: “Opening 401ks to these products risks turning workers’ retirement savings into a Ponzi-like scheme that throws a lifeline to an industry scrambling for fresh cash.”
The Democrats also flagged Trump’s ties to the crypto industry. Trump’s adult sons manage the family’s crypto business, which launched a new digital currency in September and has potentially raised as much as $5 billion, according to the Wall Street Journal.
The Trump administration defended the rule. Acting Labor Secretary Keith Sonderling said in a statement: “The department’s days of picking winners and losers are over. Our rule clearly spells out that managers must evaluate any and all potential product offerings by following a prudent process.” Treasury Secretary Scott Bessent added that the rule is “another step in ushering in President Trump’s ‘Golden Age’.”
The Financial Industry Regulation Authority (Finra) has warned that crypto investments “have experienced higher levels of volatility relative to more traditional investment assets” and that “the risk of losing all of your investment is significant.” The FBI reported cryptocurrency fraud losses of over $11 billion in 2025.
The Department of Labor did not respond to a request for comment. The proposal remains open for public comment.