Elizabeth Warren fears workers will ‘lose big’ with 401(k) crypto

Senator Elizabeth Warren wrote directly to Securities and Exchange Commission Chairman Paul Atkins, asking him to explain how the SEC plans to serve its investor protection mission as it seeks to support President Trump’s order to make cryptocurrency investments available in retirement plans.

President Trump signed an executive order in August that cleared the way for alternative assets, including cryptocurrencies like Bitcoin and private equity funds, to be more widely offered in traditional retirement plans such as 401(k) plans.

“For most Americans, a 401(k) represents a lifeline to retirement security rather than a playground for financial risk. Allowing crypto into American retirement accounts creates fertile ground for workers and families to suffer massive losses,” said the Massachusetts Democrat, ranking member of the Senate Banking, Housing and Urban Affairs Committee. He wrote a letter to Atkins on Monday Obtained exclusively by CNBC. “Given the volatility of cryptocurrency, the market’s lack of transparency, and threats from potential conflicts of interest, I am concerned that the Trump Administration’s decision to allow these risky assets to be part of such critical retirement investments threatens the retirement security of millions of Americans.”

Warren quoted 2024 Government Accountability Office survey It found that “crypto assets have uniquely high volatility” and that “there is no standard approach for predicting potential future returns on crypto assets.”

Additionally, the president predicted Bitcoin in 2021 “looks like a scam” President Trump and his family in the roughly one-year period after his re-election in November 2024, according to a forecast by the left-leaning think tank Center for American Progress. Achieved financial gains of over $1.2 billion from crypto.

“There is no reason to expect that plans to offer these alternative investments will lead to better outcomes for participants overall—especially given the higher fees and expenses that often come with them. But there is sufficient reason to think that these investment options will make matters worse by increasing the risk of major losses for participants, many of whom cannot afford them,” Warren wrote to the SEC.

The senator sent the letter the same week that two Senate committees are set to hold hearings to work on their respective sections of the crypto market structure bill. You in the letter. Warren wrote that the president’s executive order “comes as Congress is considering crypto market structure legislation that could create a tokenization loophole in which virtually any financial product offered on the blockchain could circumvent the SEC’s authority to regulate securities and put Americans’ retirement savings and investments at risk.”

Warren is not alone in warning of broader financial dangers that could arise from the Trump administration’s approach to crypto regulation. Many major unions, including the American Federation of Teachers and the AFL-CIO, have publicly voiced their concerns. Unions also worry that the governance plan’s decision to allow the tokenization of financial products could impede the SEC’s authority to regulate securities, creating new risks for Americans’ retirement savings and investments.

In her letter, Warren asked the SEC to answer the following questions to better understand how the SEC plans to mitigate crypto-related risks:

• In requiring publicly traded companies that hold, issue or invest in cryptocurrencies to disclose cryptoasset liquidity, impairment risks and market volatility, has the SEC ensured that the valuations reflected in the disclosures are fair market value, given the volatility that cryptosecurities often experience?
• Has the SEC’s Risk and Analysis Division evaluated the use of manipulative or deceptive practices in crypto markets? If not, does it plan to publish research on retail investor awareness?

• What kind of investor awareness is the SEC’s Office of Investor Education and Assistance providing to retail investors who may purchase crypto assets traditionally or through retirement plans following the Trump Administration’s recent executive order?

The SEC, through a spokesperson, declined to comment on Warren’s letter.

The Trump administration’s pro-crypto stance and Atkins’ previous statements suggest that Warren’s perspective will not have much impact on the SEC, but Atkins emphasized that crypto innovation must be balanced with investor protection. While discussing the SEC’s “Crypto Project” on CNBC in August, Atkins said that “the goal after Trump’s coup is to make America the crypto capital of the world.”

“There are a lot of ways we can help do that,” he said. “Good rules that align with the purposes of the crypto industry, so innovators can innovate, investors know what they’re investing in, and everyone can have certainty. … Capital formation and innovation in the capital markets are top of mind, as well as investor protection, so there’s a balance there.”

Atkins emphasized in an interview on CNBC in December that his approach as SEC chairman would differ from that of former SEC Chairman Gary Gensler, who sought to aggressively regulate the industry. Under Atkins, the SEC will “move forward in the crypto space and make sure we can embrace this new area of ​​innovation that the United States has resisted for far too long,” he said.

Atkins explained. Many of the details in his broader vision for crypto innovation and regulationincluding the key issue of tokenization of assets, in a speech to the Federal Reserve Bank of Philadelphia in November. In that speech, the SEC chairman also said: “Let me now be clear about what this framework is not. This is not a promise of lax enforcement at the SEC. Fraud is fraud. … if you raise money by promising to build a network and then take the proceeds and disappear, you will hear from us and we will pursue you to the fullest extent of the law.”