The American Federation of Teachers (AFT), representing 1.8 million workers, has issued a stern warning to the Senate Banking Committee regarding its proposed crypto market structure bill. The union described the legislation as "as irresponsible as it is reckless," expressing concerns that it could jeopardize working families' pensions and the broader economy.
In a letter addressed to Senators Tim Scott (R-SC) and Elizabeth Warren (D-Mass.), leaders of the committee, AFT President Randi Weingarten stated that the crypto bills reviewed by the committee in recent months have raised significant concerns. The union believes the government could inadvertently open the door to large-scale fraud and unethical practices within retirement plans, including those linked to the AFT.
Weingarten argued that the proposal treats the cryptocurrency market as if it were stable and conventional, which she contends is not the case. She further stated that the bill would dismantle existing safeguards for crypto assets and weaken protections for traditional stocks, potentially endangering retirement investments.
AFT Targets Tokenized Stocks and Retirement Exposure
A primary objection from Weingarten focused on a provision within the bill that would permit non-crypto companies to list their stock on blockchains while circumventing current securities laws. She asserted that this move alone could contaminate pension funds with risky assets.
"This loophole and the erosion of traditional securities law will have disastrous consequences: Pensions and 401(k) plans will end up having unsafe assets even if they were invested in traditional securities," she wrote.
This concern is directly related to tokenization, the process of converting traditional financial assets into digital tokens on a blockchain. The concept has garnered considerable support from prominent Wall Street figures, including Larry Fink, CEO of BlackRock, the world's largest asset manager.
Despite tokenization being promoted as the future of finance, the AFT cautioned that the bill would apply the least stringent regulations to these assets, leaving retirement funds vulnerable. Weingarten also contended that the bill does insufficient to combat illicit activities within crypto markets, highlighting ongoing issues of fraud, illegal operations, and corruption that the proposal fails to address. She reiterated her assessment of the plan as reckless, stating, "We believe that if enacted, this bill has the potential to lay the groundwork for the next financial crisis."
The AFT is not the only labor organization expressing opposition. In October, the AFL-CIO, the nation's largest labor union, also submitted its objections to the Senate Banking Committee concerning a previous draft of the same bill. Opposition has intensified as the legislation progresses toward a full Senate debate.
Democrats Push Back as Crypto Bill Seeks Votes
The bill is co-sponsored by Senators Cynthia Lummis (R-Wyoming), Bernie Moreno (R-Ohio), and Tim Scott. Its foundation is built upon legislation that previously passed the U.S. House of Representatives during the summer.
The objective is to establish a regulatory framework for cryptocurrencies, but it also raises substantial questions regarding the treatment of tokenized stocks.
Tokenization remains a significant obstacle to securing Democratic support, with Senate proponents still requiring at least seven Democratic votes for the bill to pass.
During a recent CNBC CFO Council Summit in Washington, D.C., Senator Mark Warner (D-Va.) remarked, "I’m in crypto hell at this moment trying to get the market structure bill done."
Warner later joined other Democratic senators on Monday to review the draft and explore potential counteroffers, as reported by Politico.
Democrats, including Senator Elizabeth Warren, have also been engaged in discussions regarding the allocation of crypto oversight authority between the Commodity Futures Trading Commission and the Securities and Exchange Commission. Concurrently, several states have voiced concerns that a new federal law could undermine their capacity to protect their residents.
William Galvin, Secretary of State for Massachusetts, warned in a letter that the bill's "sweeping provisions" could impede state-level oversight and leave millions of investors exposed to fraud.
Progress on the Senate version of the bill was delayed for weeks due to the longest government shutdown in U.S. history. However, momentum is now returning.
Speaking Tuesday morning at the Blockchain Association Policy Summit in Washington, D.C., Senator Cynthia Lummis indicated her intention to release a revised draft by the end of the week. She mentioned that the crypto industry, alongside Republicans and Democrats, would review the draft before proceeding to a markup session next week.
Meanwhile, pressure is mounting from the banking sector. The CEOs of Bank of America, Citi, and Wells Fargo are scheduled to meet with lawmakers on Thursday to discuss the potential impact of the crypto market structure plan on the financial system.