Crypto In 401(k)s: Senators Sanders, Warren Letter Warns $14 Trillion At Risk From DOL Proposal

Democrats in Congress are pressing back against a US Department of Labor (DOL) proposal that could significantly expand how Americans can use 401(k) retirement accounts—particularly by allowing allocations to crypto assets. 

In a letter shared with The Guardian, Senator Bernie Sanders, Senator Elizabeth Warren, and House education and workforce committee ranking member Bobby Scott of Virginia said the proposal would place an estimated $14.2 trillion in 401(k) savings at risk. They also warned that the change likely would not survive a court challenge.

The Fight Over Crypto Access In Retirement Plans

According to the letter, the proposal would “strip long-held investor protections from retirement savers” and encourage “more risky, complex, and expensive investments.” 

The lawmakers called it harmful to American workers, pointing to the way these alternative assets can behave during market stress. They argue that extreme price swings are not a hypothetical risk but a known feature of the crypto market and other private-market products.

Beyond price volatility, the lawmakers warned that the change could mean higher costs. They said the rule could expose workers to higher fees and erode long-term returns.

Those concerns have also been echoed by regulators and watchdog groups. The Financial Industry Regulatory Authority (Finra) has cautioned 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.” 

In addition, the FBI reported that cryptocurrency fraud complaints are among the highest-loss categories in cyber-enabled fraud. The bureau said Americans reported more than $11 billion in losses in 2025, underscoring what Democrats describe as another layer of danger beyond market swings.

Critics See Conflict Of Interest

Democrats also raised questions about political and financial connections. They pointed to alleged links between the crypto industry and President Donald Trump, arguing the proposal could present a conflict of interest. 

The Trump administration, however, has defended the approach as a way to expand investment choices. In a statement, the labor secretary’s acting counterpart, Keith Sonderling, said: 

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 similarly argued the move advances the administration’s broader goals, adding that the Treasury Department is “proud of this rule-making effort,” describing it as another step toward President Trump’s “Golden Age.”

Featured image created with OpenArt; chart from TradingView.com