Top Democrats from three key committees have urged the U.S. Labor Department to reconsider its proposal allowing digital and alternative assets in retirement plans. According to Cointelegraph, Senators Bernie Sanders and Elizabeth Warren, along with Representative Bobby Scott, addressed a letter to acting Labor Secretary Keith Sonderling, requesting the withdrawal of the department's plan to include private equity, digital assets, private credit, and other alternative assets in 401(k) plans.
The lawmakers expressed concerns that the policy could expose retirement accounts to highly volatile assets, such as digital currencies, due to insufficient regulation and safeguards, which could increase the risk of fraud. As ranking members of the Senate Banking Committee, Senate Committee on Health, Education, Labor and Pensions, and House Committee on Education and Workforce, they criticized the current administration for weakening enforcement against crypto fraud at financial agencies like the Securities and Exchange Commission (SEC).
The letter highlighted the evolving application of securities laws to crypto assets, noting that many protections available for public securities might not apply to crypto investments. This lack of adequate guardrails could potentially harm investors. The Labor Department's proposed policy, announced in March, was in response to an August 2025 executive order from U.S. President Donald Trump, which directed agencies to democratize access to alternative assets, including cryptocurrencies. As of December 31, Americans held approximately $10.1 trillion in 401(k) plans, according to the Investment Company Institute.
Sanders, Warren, and Scott also raised concerns about potential financial benefits for individuals within the current administration, given Trump's alleged conflicts of interest, including his family's involvement in the crypto venture, World Liberty Financial. These concerns have been echoed in proposed amendments to the digital asset market structure bill, the CLARITY Act, which is expected to be discussed in the U.S. Senate soon. Democrats have stated they will not support any legislation lacking provisions on ethics.
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