U.S. Teachers Union Urges Congress to Drop Crypto Market Bill, Cites Pension Risks

The American Federation of Teachers (AFT) has issued a letter urging the Senate Banking Committee to reconsider its upcoming crypto market structure bill – the Responsible Financial Innovation Act, calling the proposed legislation “irresponsible” and “reckless.”

The American Federation of Teachers is one of the largest labor unions in the United States, representing roughly 1.8 million members, including K-12 teachers, school staff, higher-education faculty, nurses, and public-sector workers.

AFT President Urges Senators to Oppose U.S. Crypto Market Bill

In a letter addressed to the Senate Banking Committee Chairman Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-Mass.), AFT President Randi Weingarten wrote that the union opposes the bill as it poses “profound risks” to the pensions of working families and the overall stability of the U.S. economy.

“The legislation on crypto we have seen weighed by the committee over the last few months gives us deep concern,” she said.

The Responsible Financial Innovation Act is the U.S. Senate’s primary proposal on a crypto market structure, seeking to define which cryptocurrencies fall under the jurisdiction of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The legislation will also establish a federal framework detailing how crypto exchanges, brokerages, custodians, and token issuers can operate in the country. Hence, it sets a uniform standard for registration, disclosures, consumer protection, and the treatment of customers’ crypto assets.

Randi said the teachers’ union is concerned that once the crypto bill is passed, it will open the door to large-scale fraud and unethical practices across retirement plans, including AFT-linked pension funds.

The AFT President wrote that the crypto market structure bill treats digital assets as stable and mainstream, when in reality, they are not. She added that the legislation removes the few safeguards that exist for crypto, while weakening many protections that were offered for traditional securities. Randi warned that if passed, it would “undercut” the safety of many assets and cause problems across retirement investments.

Teachers’ Union Says Tokenized Securities Undermine Federal Consumer Protections

A specific issue cited in the letter centered on the bill allowing non-crypto companies to deploy tokenized versions of their stocks on public blockchains, which the union claims would evade existing federal securities laws. Randi said that such a move could have disastrous consequences, as pensions and 401(k) plans could include “unsafe” assets even if the majority of the funds’ investments are in traditional securities.

The idea of tokenizing traditional financial assets has become increasingly popular on Wall Street, receiving backing from major players like BlackRock and Fidelity – the world’s largest and third-largest asset managers.

She also argued that the market structure bill does very little to curb fraud, illegal activity, and corruption, which are prevalent in crypto markets, calling it “irresponsible” and “reckless”.

“We believe that if enacted, this bill has the potential to lay the groundwork for the next financial crisis,” Randi said.

The AFT is not alone in its anti-crypto conviction. In October, the AFL-CIO, America’s largest labor union, addressed its opposition in a letter to the Senate Banking Committee, opposing a draft version of the same bill. According to reports, the CEOs of Bank of America, Citigroup, and Wells Fargo are set to meet with lawmakers on Thursday to discuss the crypto market structure proposal.

Sen. Lummis Expects New Crypto Bill This Week as States Voice Oversight Concerns

The current draft builds on a bill that was passed in the House of Representatives over the summer. The Responsible Financial Innovation Act, co-sponsored by pro-crypto senators Cynthia Lummis (R-WY) and Bernie Moreno (R-OH), alongside Sen. Scott, aims to create a comprehensive framework for regulating digital assets on a federal level.

However, real-world asset tokenization has been a matter of concern, especially among Democratic senators, whose votes are needed for the bill to pass. Senate backers require at least seven Democratic members’ votes to advance the legislation. During last week’s CNBC CFO Council Summit, held in Washington, D.C, Sen. Mark Warner (D-VA) told attendees that he is working hard to get the market structure bill done.

On Monday, Warner met with a group of Democratic senators to review the Senate Banking Committee’s latest draft and consider counteroffers. Many Democrats are debating how crypto oversight should be divided between the SEC and CFTC. Meanwhile, state governments are worried that a federal law could leave them powerless to protect their residents who are crypto investors.

In a letter addressed to the Committee, William Galvin, Secretary of State for Massachusetts, wrote that the bill’s “sweeping provisions” will exclude significant portions of the financial industry from state-level oversight. He called this a “recipe for disaster” for millions of savers who could be exposed to fraud.

The debate on the Responsible Financial Innovation Act was stalled due to the U.S. government shutdown, which ended last month. Speaking at the Blockchain Association Policy Summit on Tuesday, Sen. Lummis said that a new version of the draft bill could be released by the end of the week. This will be followed by vetting by Republican and Democratic lawmakers before proceeding to a markup in the coming weeks. 

Also Read: Standard Chartered Delays $500K Bitcoin Target, Revises Long-Term Outlook