Teachers' union AFT slams crypto market bill, warns of 'profound risks' to Americans' retirement

The American Federation of Teachers (AFT), representing 1.8 million educators, is calling on the Senate Banking Committee to reconsider its proposed cryptocurrency legislation, known as the Responsible Financial Innovation Act. In a letter obtained by CNBC, AFT President Randi Weingarten described the bill as both 'irresponsible' and 'reckless.' She expressed the union's concerns regarding its potential dangers to the pensions of working families and the broader economic stability. Weingarten highlighted that the current iterations of crypto legislation could lead to increased fraud and unethical practices in retirement plans, including those tied to AFT pensions. She asserted that the bill inaccurately portrays crypto assets as stable and mainstream, warning that it undermines existing safeguards while diminishing protections for traditional securities. The proposed legislation could jeopardize the safety of various assets and create challenges for retirement investments. A particularly contentious aspect of the bill is its provision allowing non-crypto companies to utilize blockchain technology for their stock, effectively circumventing established securities regulations. This has raised alarms among industry observers, especially as Wall Street explores the concept of 'tokenization' for financial assets, with BlackRock CEO Larry Fink championing the idea. Weingarten cautioned that this loophole could have severe repercussions, potentially exposing pensions and 401(k) plans to unsafe assets masquerading as traditional securities. Furthermore, she contended that the legislation fails to adequately address ongoing issues of fraud and corruption within the crypto market, labeling it as a catalyst for a future financial crisis. The AFL-CIO, the largest labor union in the U.S., has also voiced its disapproval of the Senate Banking Committee's draft of the crypto bill. In a related development, CEOs from major banks, including Bank of America, Citi, and Wells Fargo, are scheduled to meet with lawmakers to discuss these proposals. The current legislation, which builds on a House bill from earlier this summer, is co-sponsored by notable crypto advocates Senators Cynthia Lummis and Bernie Moreno, alongside Chairman Tim Scott. While it aims to establish a regulatory framework for digital assets, it raises intricate questions regarding tokenized securities beyond traditional cryptocurrencies. As the bill gains traction in Congress, concerns persist among Democratic senators about the balance of regulatory authority between the CFTC and the SEC. Moreover, many states fear that new federal regulations could weaken their ability to protect residents from fraud. Massachusetts Secretary of State William Galvin highlighted these concerns, cautioning that the proposed provisions could strip states of their oversight capabilities. Progress on the Senate's crypto market structure bill has been delayed due to the prolonged U.S. government shutdown. However, Senator Lummis indicated at a recent summit that a draft of the bill could be shared by the end of the week, allowing for feedback from both the crypto industry and bipartisan lawmakers before moving forward to markup next week.