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US labor federation warns CLARITY Act could push crypto closer to workers' retirement money
Labor argues the bill could give digital assets enough regulatory cover to move closer to retirement accounts before safeguards catch up. The next decision point is committee markup.
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A US labor federation warns that the CLARITY Act could open the door for digital assets to enter workers' retirement accounts before regulatory safeguards catch up. The group argues the bill's push for a federal classification framework may give crypto enough perceived legitimacy that fiduciaries of 401(k) plans and other retirement vehicles begin allocating under a general prudent-investor standard. The market remains volatile and vulnerable to fraud, making that a risky proposition for savers who cannot afford principal loss.
The warning targets the gap between the bill's stated goal – providing clear legal categories for digital tokens – and the absence of specific protections for retirement plan participants. Under current law, retirement plan fiduciaries must act solely in the interest of beneficiaries. The CLARITY Act does not explicitly amend that duty. By designating certain digital assets as a recognized investment category, it could lower the legal hurdle for including crypto in a plan's menu. Labor groups see that as a recipe for pushing volatility closer to savings that depend on capital preservation.
How the CLARITY Act Changes the Fiduciary Math
The CLARITY Act (Clearing Lines Around the Intent of Digital Assets) aims to resolve which tokens are securities, commodities, or something else. That classification determines custody rules, exchange registration, and tax treatment. Once the framework is set, retirement plan providers may treat digital assets as a standard asset class on par with equities or bonds – without waiting for the SEC or the Department of Labor to issue crypto-specific guidance for retirement accounts.
The mechanism is straightforward. If the CLARITY Act declares a token a commodity, plan sponsors may argue that including it is no different from including gold ETFs. If it declares a token a security, plan sponsors may treat it like a stock. In either case, the asset's inherent liquidity risk and valuation opacity receive less scrutiny than traditional assets receive under decades of case law. The labor federation contends that fiduciaries lack the expertise to properly assess these risks in a new and evolving market.