US lawmakers push back on Labor Department plans to include crypto in 401(k)s

Three U.S. lawmakers are blocking the Labor Department's proposal to allow cryptocurrency in 401(k) retirement accounts, citing volatility and regulatory gaps as threats to retirement security.

Representatives Tom Emmer (R-Minnesota), French Hill (R-Arkansas), and Ro Khanna (D-California) oppose the initiative in a formal pushback. The trio argues that digital assets expose retirees to extreme price swings without adequate consumer protections. Bitcoin and Ethereum alone have experienced 30% to 50% intra-year drawdowns in recent cycles. They also point to the absence of comprehensive federal crypto regulation as a disqualifying factor for mainstream pension deployment.

The Labor Department has been exploring rules that would permit plan sponsors to offer digital assets as investment options within tax-advantaged retirement accounts. Proponents frame this as expanding financial autonomy for workers. The crypto industry sees 401(k) exposure as a path to institutional adoption, particularly as Bitcoin ETFs demonstrate mainstream acceptance.

However, the congressional opposition reflects deeper skepticism about retail exposure to nascent assets. The lawmakers worry that ordinary Americans lack the expertise to evaluate crypto risk. They also highlight the absence of fiduciary standards specific to digital assets. Current 401(k) regulations require plan fiduciaries to act in participants' best interests, but the Labor Department has not issued clear guidance on how these standards apply to volatile, speculative assets.

This clash mirrors broader legislative deadlock on crypto policy. While some Republicans champion innovation and self-custody, others align with Democratic caution on consumer harm. The Biden administration has avoided taking a hard stance on crypto in retirement accounts, leaving the Labor Department to navigate the debate independently.

The three-member coalition carries limited legislative weight relative to full committee leadership, but their bipartisan makeup signals real institutional concern. Approval remains unlikely without broader congressional consensus or explicit Labor Department rulemaking that addresses fiduciary liability and custody standards for digital assets in retirement funds.