Maxine Waters Urges Labor Department to Drop Trump-Era 401(k) Crypto Investment Proposal

U.S. Representative Maxine Waters is urging the Department of Labor to withdraw a proposed rule that would make it easier for 401(k) retirement plans to include alternative investments such as cryptocurrency, private equity, private credit, real estate, and commodities. The proposal, introduced in March, follows an executive order issued by President Donald Trump aimed at expanding investment choices within employer-sponsored retirement accounts.

Waters, who could return as chair of the House Financial Services Committee if Democrats regain control of the U.S. House of Representatives after the November midterm elections, submitted an 11-page comment letter opposing the proposal. While the committee does not directly oversee the Department of Labor’s retirement policies, it has jurisdiction over the U.S. Securities and Exchange Commission (SEC), which regulates investment markets.

In her letter to Acting Labor Secretary Keith Sonderling, Waters argued that allowing digital assets in retirement accounts is premature because the SEC is still developing a comprehensive regulatory framework to strengthen investor protections in the cryptocurrency market.

She stated that it would be inconsistent for the Labor Department to endorse digital assets as appropriate retirement investments while federal regulators continue working to establish safeguards for everyday investors. Waters also warned that the risks extend beyond cryptocurrency price volatility, citing what she described as declining trading activity, reduced developer participation, and weakening user engagement across the broader digital asset ecosystem.

According to Waters, the proposal could expose millions of retirement savers to a market that still operates without a fully established federal regulatory framework and has been associated with significant investor losses in recent years.

The proposed rule stems from President Trump’s executive order issued in August last year, directing federal agencies to ensure Americans with government-regulated retirement accounts have greater access to alternative asset investments for potential portfolio diversification and long-term growth. If finalized, the rule would encourage 401(k) plan managers to consider offering these investment options, including digital assets, alongside more traditional retirement investments.

The Labor Department has not yet finalized the proposal, leaving its future subject to ongoing public feedback and regulatory review. Waters’ opposition underscores the continuing debate over whether cryptocurrencies and other alternative assets are suitable for long-term retirement savings, particularly as federal agencies continue to refine the regulatory landscape governing digital investments.