Democrats Urge DOL to Reconsider Crypto 401(k) Rule Amid $11.4B Fraud Toll

Three US Democrats are pushing for the Department of Labor to withdraw its proposed rule allowing 401(k) plans to include cryptocurrency investments. The move is led by Rep. Maxine Waters, who argues that the rule is 'incoherent' and could put workers at risk due to a lack of investor protection framework.

The proposed rule would create a safe harbor for fiduciaries to add alternative investments, including crypto, to 401(k) plans without being held personally liable. However, critics argue that this would shift the burden of proof from fiduciaries to workers, making it harder for them to challenge investment decisions.

The Democrats' push comes as a record $11.4 billion in crypto-related fraud losses was reported in 2025, with Americans over 60 bearing a disproportionate share of those losses. Waters and Senators Bernie Sanders and Elizabeth Warren argue that the Labor Department is moving too quickly to extend federal protection to digital assets without adequate safeguards.

The proposed rule has been met with skepticism from legal analysts, who note that fiduciaries are unlikely to add crypto or other alternative assets to plan menus until courts have confirmed that the safe harbor is valid. The Blockchain Association and some proponents of the rule argue that it would close an access gap for retirement savers.