Trump’s “Bitcoin Retirement Plan” Faces Backlash: Democrats Claim It Would Jeopardize U.S. Workers’ Retirement?
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Trump’s “Bitcoin Retirement Plan” Faces Backlash: Democrats Claim It Would Jeopardize U.S. Workers’ Retirement?
Sanders Warren Warns: $14 Trillion in Retirement Funds at Risk of Collapse?
Navigating Web3 tides with focused insightsBy Micah Zimmerman
Translated by AididiaoJP, Foresight News
Senators Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) are urging the Trump administration’s Department of Labor to rescind a rule that would open U.S. retirement savings accounts to Bitcoin and other cryptocurrencies. The lawmakers argue the move would jeopardize workers’ financial futures while enriching President Trump and his family.
On Monday, three Democratic lawmakers sent a 14-page letter to Acting Labor Secretary Keith Sonderling. Sanders, Warren, and Bobby Scott (D-VA), the Ranking Member of the House Committee on Education and the Workforce, strongly condemned the Department of Labor’s proposed rule issued in March.
The rule would provide fiduciaries of 401(k) plans with protection when offering volatile assets—including cryptocurrencies, private equity, and private credit—as long as they can demonstrate having weighed relevant factors before making such offerings.
The letter states: “The proposed rule is harmful to American workers and contradicts the law, congressional intent, existing regulations, and case law.”
What Impact Would This Rule Have?
This proposal stems from an executive order signed by President Trump last August, directing the Department of Labor to reexamine how alternative assets are treated in retirement plans. Under current law, fiduciaries managing 401(k) plans must adhere to strict “prudence” standards—a requirement rooted in the Employee Retirement Income Security Act of 1974 (ERISA) and reinforced by Supreme Court precedent.
Democratic lawmakers contend the new rule would reverse this standard. Rather than requiring fiduciaries to prove they conducted due diligence, the rule would presume prudence if fiduciaries follow the prescribed procedural steps.
Lawmakers say this shift conflicts with decades of legal precedent and would expose approximately $14.2 trillion held in U.S. 401(k) accounts to highly volatile, lightly regulated assets.
The Financial Industry Regulatory Authority (FINRA) has warned that cryptocurrency investments “exhibit higher volatility relative to traditional investment assets” and carry a “significantly elevated risk of losing the entire investment.” An FBI report shows cryptocurrency scams resulted in over $11 billion in losses in 2025—making it one of the costliest categories of cybercrime.
The Trump Conflict-of-Interest Argument
Democratic lawmakers’ criticism extends beyond retirement policy to direct allegations of conflict of interest. Trump’s adult children manage the family’s cryptocurrency business. According to The Wall Street Journal, this venture has raised roughly $5 billion for the Trump family since launching its digital currency in September last year.
The Trump family’s crypto portfolio includes WLFI and USD1 tokens issued by World Liberty Financial, as well as the official Trump meme coin—which surged above $75 around President Trump’s January 2025 inauguration before crashing to about $2.
The letter states: “The changes to the prudence standard described above expand opportunities for President Trump and his family to profit at the expense of taxpayers, workers, and retirees.”
Consumer advocacy group Americans for Financial Reform echoed similar concerns. Oscar Valdés Viera, the organization’s Senior Policy Analyst, said: “Opening 401(k) accounts to these products risks turning workers’ retirement savings into something akin to a Ponzi scheme—providing a lifeline to an industry desperate for fresh capital.”
The letter also cites elderly poverty data: Over 22.8% of older Americans live in poverty, compared to 5.1% in Denmark, 5.8% in France, and 12.6% in Germany—highlighting retirees’ inability to absorb major losses.
The Administration’s Defense
The Trump administration describes the rule as an effort to expand workers’ choice.
Acting Labor Secretary Sonderling stated in a press release: “The Department of Labor’s days of picking winners and losers are over. Our rule makes clear that managers must assess any potential product offering by following a prudent process.”
Treasury Secretary Scott Bessent also voiced support, calling the rule “another step toward ushering in President Trump’s ‘Golden Age.’”
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