Cyrus Reed: Iris, you see the ProPublica piece drop?
Iris Holm: July 8th. Yeah.
Cyrus Reed: Because I read it and my first thought was — this is actually happening, like, not hypothetically, not 'the administration is considering,' it already happened. August 7, 2025, Executive Order 14330, signed. Biden guidance cautioning fiduciaries against digital assets in 401(k)s — rescinded. And then EBSA drops a proposed rule March 30th, 2026 and we're just — we're supposed to be okay with the fact that it's still proposed?
Iris Holm: Plan sponsors are making live decisions against a rule that doesn't legally exist yet. That's the exposure.
Cyrus Reed: How many people are we talking about where that exposure lands?
Iris Holm: Ninety million. Covered by defined-contribution plans affected by this order. And DOL isn't the only agency with a mandate here — Trump directed SEC and Treasury at the same time. Three agencies, one executive order.
Cyrus Reed: Wait — all three simultaneously? Because that's not — I mean, that's a coordination signal, right? That's not one agency deciding to update a rule. That's a policy push with a direction.
Iris Holm: And the name of the order does a lot of work. 'Democratizing access.' Frankly, that framing is doing the heaviest lifting of anything in this story.
Cyrus Reed: But 'democratizing' — okay, wait, I want to stress-test that word for a second because — think about what it actually means if a plan sponsor just adds a crypto option to a dropdown menu. A hedge fund manager has analysts. A 54-year-old has a dropdown. Is that the same thing as access?
Iris Holm: It's not. And here's the mechanism that makes it concrete. Think of it like a building code. The old code said don't use this material in load-bearing walls. New administration tore out that page and said we'll publish a new code soon. But construction started before the new code arrived.
Cyrus Reed: So the workers are the building.
Iris Holm: The Biden guidance wasn't just a caution. It was litigation cover. A plan sponsor who wanted to say no to crypto could point to that document. Removing it changed the incentive structure, not just the rules.
Cyrus Reed: Wait — so it wasn't even that sponsors were forced to say no. It was that they had a — a shield, basically, and now the shield is gone and the replacement isn't — it doesn't exist yet, legally.
Iris Holm: The EBSA proposed rule sets up a six-factor checklist under ERISA. Process-based. Follow the checklist, you're protected. But that safe harbor protects the plan sponsor. Not the worker.
Cyrus Reed: Okay but — doesn't the administration's framing just say 'we trust fiduciaries to make the call'? Like isn't that the argument? That ERISA's fiduciary duty is enough?
Iris Holm: Then explain Lori Chavez-DeRemer addressing a cryptocurrency conference right before issuing the proposed rule. That is not a signal of neutrality. That is a directional signal wearing a procedural costume.
Cyrus Reed: No — that's a real thing. The Secretary of Labor at a crypto conference, then the rule drops. That's not — I mean, that's not how you signal 'we're just updating process.'
Iris Holm: And that's actually where the wrong take lives. I keep hearing that the safe harbor is worker protection. It isn't. The EBSA rule protects the plan sponsor. A fiduciary follows the six-factor framework — documents the process, checks the boxes — and their litigation risk drops. The worker's account still goes to zero if crypto craters.
Cyrus Reed: Wait — but isn't that how ERISA has always worked? Like, process-based fiduciary duty isn't new.
Iris Holm: Fair. That's the right objection. But ERISA's process standard was built around assets with bounded volatility — diversified funds, bonds. Not assets with documented 70% drawdown risk. The process is the same. The asset underneath it is categorically different.
Cyrus Reed: So the framework is — wait, actually the framework assumes the asset class is roughly sane, and crypto just... breaks that assumption silently.
Iris Holm: The Economic Policy Institute named this explicitly in their public comments. The asset-neutral approach means a sponsor who adds a crypto option that loses 70% faces the same litigation exposure as one whose bond fund lost 8%. That's the structural asymmetry.
Cyrus Reed: Gibson Dunn and Ballard Spahr both published client alerts walking plan sponsors through the six-factor framework. Detailed analysis. And the worker sees a menu dropdown. That gap is just — it's not subtle.
Iris Holm: That's the sophistication asymmetry made visible. Bobby Scott put it in formal opposition — ranking member of House Education and Workforce — but the concrete version is: sponsor has a law firm, worker has a checkbox labeled 'crypto.'
Cyrus Reed: Put a number on it. What does the loss actually look like — like a real person.
Iris Holm: Fifty-four years old, $280,000 in a 401(k). Sponsor followed every safe-harbor step — process was clean. Crypto drops 70%. Sponsor is protected. Worker cannot absorb that and still retire on schedule. And if the proposed rule never finalizes — gets vacated, whatever — sponsors who already added crypto during the gap face ERISA liability with no safe harbor at all. That part comes later and it's worse.
Cyrus Reed: Wait — no, that last part. If the rule gets vacated. Because the CLARITY Act is moving at the same time, right, so you've got — okay, this is the thing I keep losing the thread on — you've got the DOL proposed rule on one track, and then a parallel congressional push on crypto regulation, and those aren't sequenced, they're just... both happening, and plan sponsors are making real decisions inside that gap.
Iris Holm: Compounding deregulatory pressure. That's the actual condition. Not a transition. A stack.
Cyrus Reed: And Ben McKenzie — the actor — is literally testifying to the Senate, urging them to vote down the CLARITY Act. Which tells you the opposition coalition is... I mean, it's not just EPI economists and Bobby Scott. It's wide enough that a former TV actor is the public face of it.
Iris Holm: That's a signal about salience, not policy. The argument against the CLARITY Act has to work on the same legal terrain as the DOL rule.
Cyrus Reed: Right — but the court-challenge scenario is actually the scary one. Because if someone vacates the proposed rule — federal court, administrative challenge, whatever — sponsors who already added crypto during the interim have zero safe harbor to point to. They just have... ERISA. The full fiduciary standard. No checklist.
Iris Holm: And they made that decision in a window where the Biden cautions were already rescinded. So they can't claim the old guardrail either.
Cyrus Reed: No safe harbor forward, no caution document backward. That is — I mean, that's an exposure with no exit. Now here's what I actually — wait, the democratization frame. It was made about index funds in the seventies. And index funds worked because systemic market risk is what, diversified across everything. Crypto isn't that. EPI's comments flagged fraud and manipulation risk specifically. That's categorically different from 'the whole market went down.'
Iris Holm: Index funds carried systemic risk. Crypto carries acute fraud exposure on top. The argument rhymes. The asset doesn't.
Cyrus Reed: So what do you actually watch for — like, right now, what's the concrete signal that this goes badly before anyone can stop it?
Iris Holm: The plan sponsor is protected. That's the answer to your question. When crypto craters — not if — ERISA's fiduciary standard, as redefined by the EBSA proposed rule, shields the process, not the outcome. The worker absorbs the loss. That's what the structure produces.
Cyrus Reed: ERISA was built to protect workers from losses. That's the founding premise, 1974, that's what the law is for. And now the same law, same fiduciary duty language, is being used to — wait, not to protect the worker from the loss, but to protect the sponsor from the worker's claim about the loss. That's not — I don't think that's what the law was for.
Iris Holm: No. It wasn't.
Cyrus Reed: So the real question isn't whether the rule finalizes. It's — what happens to the 54-year-old when it does, and the asset collapses, and the checklist was clean. Who is left standing after that? Because I genuinely don't know.
Iris Holm: Neither do I. That's the part that doesn't resolve.
