Senators Bernie Sanders and Elizabeth Warren, joined by Representative Bobby Scott and other Democratic committee leaders, have urged the U.S. Department of Labor to rescind a proposed rule that would make it easier for 401(k) plans to include crypto, private equity, private credit and other alternative assets. Their argument is that retirement-plan access should not come at the expense of ERISA’s prudence standard, especially for workers whose savings depend on fiduciary oversight.
The DOL proposal, issued on March 30, would establish process-based safe harbors for fiduciaries selecting designated investment alternatives. The department says plan managers would need to evaluate factors such as performance, fees, liquidity, valuation, benchmarks and complexity, and frames the rule as a way to broaden investment options for more than 90 million Americans. The lawmakers see the same structure as a weakening of investor protection.
Lawmakers Say the Safe Harbor Weakens Fiduciary Duty
The letter argues that the proposal creates excessive deference to plan sponsors and asset managers by allowing fiduciaries to satisfy the safe harbor through a checklist-style review. That is the core legal objection: process should not become a substitute for demonstrable prudence, particularly when retirement savers may not understand the liquidity, valuation and fee risks embedded in alternative products.
Crypto is the most politically visible part of the dispute, but not the only one. The lawmakers warned that the rule would open an estimated $14.2 trillion retirement market to private equity, digital assets, private credit, high-cost annuities and other complex vehicles. Their concern is that products built for sophisticated investors could migrate into worker retirement plans without equivalent bargaining power or transparency.
The fraud backdrop strengthens their case against crypto exposure. The FBI said Americans who filed cryptocurrency-related complaints in 2025 reported more than $11 billion in losses across 181,565 complaints. For opponents of the rule, that figure makes digital assets difficult to reconcile with default retirement-savings protections, even if crypto products are no longer treated as categorically off-limits.
The letter also points to the DOL’s own policy reversal. In 2022, the department told fiduciaries to exercise “extreme care” before adding cryptocurrency to 401(k) menus; in May 2025, it rescinded that guidance and said it was returning to a neutral approach that neither endorsed nor opposed crypto inclusion. The new proposal moves the debate from caution to facilitation.
ERISA Litigation Risk Moves Higher
The legal fight turns on whether the rule is consistent with ERISA’s continuing duty of prudence. The lawmakers argue that the proposal improperly separates investment selection from ongoing monitoring, even though the Supreme Court in Hughes v. Northwestern University reaffirmed that fiduciaries must monitor plan investments and remove imprudent options. That continuing-duty principle is the main litigation risk for plan sponsors.
They also criticized the proposal’s reliance on Anderson v. Intel Corp. Investment Policy Committee, a pending Supreme Court case involving ERISA underperformance claims. The Court granted certiorari on January 16, 2026, meaning the lawmakers believe the DOL is building a major retirement rule on unsettled legal ground. If the Court narrows or changes the pleading standard, the regulatory foundation could shift quickly.
For plan sponsors, the immediate implication is process discipline. Adding crypto or alternative assets would require documented asset-specific due diligence, meaningful benchmarks, liquidity analysis, fee comparison, custody review and continuous monitoring after selection. A safe harbor may reduce some litigation fear, but it will not erase fiduciary exposure if the process is thin.
For asset managers, the proposal could open a large distribution channel, but it also raises product-design pressure. Funds built for retirement menus would need clearer valuation methods, lower fee opacity, stronger liquidity disclosures and operational controls that can withstand audits, participant complaints and possible class-action scrutiny.
For crypto firms, the stakes are even sharper. 401(k) access would represent a major legitimacy milestone, but products placed in retirement plans will face a higher fiduciary standard than retail exchange listings or speculative trading platforms.
The debate now shifts to the DOL’s comment record and any revisions before a final rule. If the agency proceeds, plan administrators, recordkeepers and audit committees will need to update governance around custody, disclosure, valuation and conflict controls. If the proposal is withdrawn or narrowed, crypto’s path into mainstream retirement menus will remain more limited.
