Three prominent Democratic figures in Congress have formally requested that the U.S. Department of Labor withdraw a newly proposed policy that would allow cryptocurrencies and other alternative investments within 401(k) retirement accounts, which collectively hold over $10 trillion in assets. Senators Bernie Sanders and Elizabeth Warren, along with Representative Bobby Scott, sent a letter to acting Labor Secretary Keith Sonderling on Tuesday, arguing that the proposal exposes retirees to highly volatile assets and increases the risk of fraud. The lawmakers, who serve as ranking members on key committees overseeing banking, labor, and education, contend that digital assets lack adequate investor protections due to the evolving nature of securities laws as applied to cryptocurrencies. They emphasized that this regulatory gap could lead to significant harm for retirement savers, as many crypto assets operate outside traditional safeguards. The letter builds on previous objections from Warren, who earlier cited research from the Government Accountability Office highlighting the unique volatility and valuation challenges associated with crypto. The Labor Department’s draft guidance, released in March, proposed a framework allowing plan sponsors to include assets like private equity, private credit, and digital currencies, provided they meet ERISA standards for prudence, diversification, and liquidity. However, the Democratic leaders argue that the policy could inadvertently expose inexperienced investors to risky assets without sufficient oversight. They also pointed to potential conflicts of interest, linking the proposal to the Trump administration’s broader push for crypto access, including an executive order signed by President Donald Trump in April that directed agencies to expand retirement investment options. The lawmakers noted the Trump family’s involvement with a crypto venture as raising ethical questions. These concerns mirror ongoing debates in Congress around the CLARITY Act, a digital asset market structure bill that has stalled over ethics provisions. The Democrats’ letter underscores a deepening partisan divide over the role of crypto in retirement planning, with critics warning that loose regulations could jeopardize the financial security of millions of Americans.