AFT Urges U.S. Senate to Withdraw Crypto Market Bill Citing Major Pension and Retirement Risks

AFT warns crypto bill risks pensions and retirement savings for millions of American workers.

Tokenized stocks could bypass securities laws and expose retirement funds to unsafe assets.

Senate plans vote soon but critics say the bill does not protect investors enough.

The American Federation of Teachers (AFT) urged the U.S. Senate to withdraw the Responsible Financial Innovation Act. The union raised grave concerns over the pensions and the American economy as a whole. The AFT has 1.8 million members, and it is concerned with securing retirement. The letter further highlighted that the bill puts working families at economic risk, regardless of whether they own cryptocurrency or not.

The union claimed that the bill does not put in place proper regulatory protection of crypto assets and stablecoins. It cautioned that tokenized assets might get into retirement funds, such as pensions, without due diligence. AFT noted that non-crypto companies could tokenize their stock on blockchain platforms. This, the union stated, could bypass securities regulations, reporting requirements, and intermediary oversight.

Concerns Over Retirement Security

AFT highlighted the risk that pension and 401(k) plans may hold unsafe digital assets. Current retirement systems rely on traditional securities, which offer stability and protections. The union cautioned that the bill would enable such systems to contain various volatile crypto and tokenized assets. It claimed that such a change would undermine investor protection and lower regulatory responsibility.

Other wider financial risks were also brought up by the letter. It stated that gaps in the bill could encourage illegal activities in the crypto market. This, the union claimed, could create conditions for another financial crisis. The union emphasized that the bill does little to prevent fraud, market manipulation, or other risks that have plagued crypto markets.

Regulatory Framework and Tokenization Loopholes

Senators Cynthia Lummis and Kirsten Gillibrand proposed the Responsible Financial Innovation Act. Earlier, Twelve Democratic Senators confirmed bipartisan support for advancing the Clarity Act this year. The bipartisan bill is meant to establish a regulatory system concerning digital assets. It establishes the meaning of digital assets, payment stablecoins and delegates the regulation of the institutions to the Securities and Exchange Commission and Commodity Futures Trading Commission.

Opponents, such as AFT, say that the bill is against the traditional securities laws. They cautioned that regulation of tokenized assets would make it possible to avoid registration and reporting requirements. The union claimed that these loopholes are a danger to investor safeguards and could disrupt retirement funds. They also pointed out that the act fails to deal with current unlawful activities in crypto markets, which create gaps of regulation.

Senate Timeline and Legislative Process

According to Senator Lummis, a discussion draft was scheduled to be released by the end of the week. Lawmakers seek to have the bill voted by next week. Even though the supporters are of the view that the bill offers regulatory clarity, critics point out that it does not safeguard retirement investors. The AFT and other organizations are still urging on tougher measures to secure pension and 401 (k) safety. Lawmakers recently urged the SEC to speed up crypto access in $12.5 trillion 401k retirement plans through new rules.

Tension between cryptocurrency innovation and investor protection is highlighted in the petition submitted to the union. It puts into the limelight the risks facing retirement savings of the American workers in case the bill is enacted in its current state.