Maxine Waters demands Labor Department scrap crypto 401(k) proposal
In brief
- Waters argues SEC hasn't completed investor protections for digital assets before allowing 401(k) crypto exposure
- Labor Department proposed the rule in March following Trump's executive order on alternative retirement investments
- Waters cited ecosystem deterioration, collapsed trading activity, and significant investor losses as key concerns
Waters, who previously wielded the committee gavel when Democrats last held power, may return to chair the panel if her party wins the House majority in the November elections. Kalshi betting currently estimates an 82% likelihood that Democrats will win House control.
The Labor Department's proposal
In March, the Labor Department proposed a rule to implement what President Donald Trump had ordered: that people's 401(k) managers could offer alternative investments including cryptocurrency. Trump issued an executive order in August of the previous year calling for alternative asset investment opportunities in government-structured retirement accounts.
The proposal has not yet been finalized. Waters' letter, addressed to the department's acting secretary Keith Sonderling, argues that the timing and substance of the rule create unnecessary risks for ordinary savers.
Waters' core objection
Waters contends it's incoherent for the Labor Department to approve digital assets for retirement accounts while the Securities and Exchange Commission is still building investor-protection frameworks for those same assets. She wrote: "It is incoherent for the department to bless digital assets as suitable for the retirement savings of everyday Americans while the [Securities and Exchange Commission] is still building the investor-protection regime intended to make those same assets safe for ordinary investors."
She also highlighted deterioration in the digital-asset market itself. Waters stated that the digital-asset ecosystem has experienced a collapse in trading activity, developer engagement, and user participation, and that the digital assets market operates outside any federal framework and has produced staggering investor losses.
Waters' intervention signals potential headwinds for the proposal if Democrats regain House control and she assumes the Financial Services gavel.
