U.S. House Democrat Blasts Crypto in 401(k) Retirement Plans

Maxine Waters, the top Democrat on the House Financial Services Committee, has urged the head of the Department of Labor to scrap its proposal concerning alternative investments.

Waters, who could soon lead the committee again if Democrats perform well in the November elections, is calling on the Labor Department to reconsider a plan that would encourage 401(k) plan managers to include alternative assets such as cryptocurrency.

Earlier this year, in March, the Labor Department introduced a rule aligned with an order from President Donald Trump. The proposal would allow retirement accounts to invest in assets like private equity, private credit, real estate, commodities, and digital currencies. In response, Waters submitted an 11-page letter this week, strongly recommending the withdrawal of the proposal.

In her letter, Waters argued that it is inconsistent for the department to approve digital assets for retirement savings while the Securities and Exchange Commission is still developing safeguards to protect investors. She emphasized that the risks go beyond the volatility of individual cryptocurrencies, pointing instead to broader weaknesses in the digital asset sector, including declining trading activity, reduced developer involvement, and falling user participation.

Waters, who previously chaired the committee, could regain that position if Democrats win control of the House in the upcoming midterm elections. Current predictions on Kalshi suggest an 82% likelihood of that outcome. Although the committee does not directly control 401(k) policies, it does oversee the SEC, which regulates investment markets.

In her communication to Acting Labor Secretary Keith Sonderling, Waters warned that the proposal could expose investors to a largely unregulated digital asset market that has already resulted in significant financial losses.

The proposal follows an executive order issued by Trump last August, directing his administration to provide individuals with government-backed retirement plans the opportunity to access potential growth and diversification through alternative investments.