Retirement Retirement Planning

Elizabeth Warren Just Raised a Big Red Flag About Your 401(k)

American workers should know about this.

By Catherine Collins

Edited by Andrea Basse

Updated Jan. 26, 2026

Over the last few years, cryptocurrency has become more common and more widely accepted. It's become so prevalent that in 2026, lawmakers are debating whether or not to allow cryptocurrency as an asset workers can purchase inside of 401(k) retirement plans.

However, there are many people in Washington who are against this because cryptocurrency is still a volatile asset. Senator Elizabeth Warren has been warning about the dangers of allowing people to purchase cryptocurrency as part of their 401(k) investments. Her concern is that it's not in the best interest of American workers who may not understand the risks.

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The ultimate goal of 401(k) plans

This debate is significant because 401(k)s are one of the most widely used retirement plans in America. In fact, according to data from Fidelity, 43% of the population has one. The goal of a 401(k) plan is to offer investment options and employer benefits, such as employer matches, over a long period of time.

Because 401(k)s are designed to be safe, reliable investment accounts, there are only certain types of funds allowed within them. Many workers might not be familiar with the investment options that their 401(k) plans offer. For that reason, if cryptocurrency is an option in the future, they could risk purchasing more volatile investments than they intended.

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The challenges of navigating 401(k) plans

Even though many employees today have 401(k) plans, many people still experience uncertainty when it comes to choosing funds, assessing fees, and understanding their employer's match. Several plans offer default options and many employers don't have built-in financial advisors for their employees to consult.

That puts the the responsibility of saving and investing for retirement on workers, who might or might not be willing to seek advice or help with their financial goals. Without proper regulation and clear guidance, cryptocurrency offerings could add to these challenges.

Why Senator Warren is against allowing crypto in 401(k)s

Because many workers are not familiar with the risks of cryptocurrency, Senator Elizabeth Warren drafted a letter to the SEC asking the agency what steps it would take to protect American workers' retirement funds.

In the letter, she described cryptocurrency as volatile and highlighted the importance of Americans having access to a secure retirement fund. In the letter, Senator Warren requested a response from the SEC by January 27, 2026.

How volatile assets affect retirement savings

When an investment is volatile, it means that the price fluctuates significantly. That's considered a riskier investment than other options, like government bonds for example. While investors should always expect the market to ebb and flow, significant volatility can affect 401(k) retirement balances, especially for those who are close to retirement.

The differences between crypto and stocks for long term investing

Those who oppose Senator Warren's stance against cryptocurrency argue that stocks can also be volatile investments, and stocks are allowed in 401(k) plans. However, these two assets are different. When you own a stock, you own a portion of a company. The stock market is regulated, and companies are required to report earnings.

Cryptocurrency is much less regulated. It's not a portion of ownership in a company. Rather, it's a form of digital currency with a value that changed rapidly depending on the market.

The White House's take on digital assets

The Trump Administration issued an executive order in January 2025 illustrating the administration's goal of supporting "the responsible growth and use of digital assets," including cryptocurrency. The executive order also announced a Working Group designated to discuss digital assets and their regulation.

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The future of crypto in 401(k)s

Currently, Senator Warren is still waiting on a response from the SEC outlining what steps will be taken to mitigate risk within 401(k) accounts. No decisions have been made yet regarding whether or not cryptocurrency will be a part of 401(k) asset options in the future.

Steps workers can take now

If you want to become more knowledgeable about your 401(k) options, speak with your human resources department or work with a financial planner. Your 401(k) plan comes with documents that outlines your investment options, what they cost, and the fees you pay. It's also a good idea to review your workplace's matching options, so you can be as informed as possible when maximizing your retirement investments. Ultimately, the more you know, the better, and the more prepared for retirement you'll be.

Bottom line:

The use of cryptocurrency is becoming more widespread, and because of that, some government officials believe it should become a part of 401(k) plans. However, not everyone agrees that cryptocurrencies belong in 401(k) plans, which are designed to be a safe, regulated investment option that helps workers retire comfortably. This debate is ongoing, and there have been no decisions made yet.

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