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Largest US Union Federation Opposes Crypto Bill, Says It Exposes Workers’ Retirement Funds to Risk

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The AFL-CIO has urged the Senate Banking Committee to oppose the Responsible Financial Innovation Act, warning that the laws would expose employees’ retirement funds to crypto volatility whereas growing systemic monetary danger.

In an October 7 letter to Chairman Scott and Ranking Member Warren, AFL-CIO Director of Government Affairs Jody Calemine acknowledged the invoice would greenlight retirement plans like 401(okay)s and pensions to maintain dangerous crypto belongings quite than insulating employees from instability.

The union federation represents tens of millions of American employees whose retirement safety could possibly be affected by the laws.

The opposition comes as President Trump signed an executive order in August permitting American employees to add various belongings, together with cryptocurrency, to their $12.5 trillion 401(okay) portfolios.

More than 90 million Americans take part in employer-sponsored defined-contribution plans, with whole US retirement belongings valued at $43.4 trillion as of March 31, 2025.

House Financial Services Committee Chairman French Hill and Subcommittee Chairman Ann Wagner urged SEC Chair Paul Atkins on September 22 to implement the directive swiftly by recognizing FINRA-certified professionals as accredited traders.

Union Warns Bill Creates Shadow Markets and Exposes FDIC to Risk

The AFL-CIO claimed to have recognized two quick systemic dangers within the laws.

First, the proposal would develop the power of FDIC-backed banks and financial institution holding firms to maintain and commerce crypto belongings instantly, quite than solely on behalf of purchasers.

This, in accordance to them, would expose banks to a heightened danger of losses and failures, whereas additionally placing the FDIC’s taxpayer-backed Deposit Insurance Fund at better danger.

Second, the invoice codifies the tokenization of securities and belongings, permitting non-public firms to create shadow public inventory outdoors SEC oversight.

Calemine warned these blockchain-based shadow shares, notionally tied to conventional public inventory however buying and selling independently, would create new dangers for each shadow stockholders and public stockholders who didn’t decide into unregulated markets.

The union expressed deep concern concerning the potential influence on the soundness of conventional monetary markets and establishments, evaluating the dangers to unregulated derivatives markets that contributed to the 2008 monetary disaster.

Largest US Union Federation Opposes Crypto Bill, Says It Exposes Workers' Retirement Funds to Risk
Source: BIS

The laws considerably weakens federal and state enforcement instruments to police fraud and conflicts of curiosity, in accordance to the AFL-CIO.

The invoice creates avenues for securities issuers to evade SEC regulation by means of tokenization, reduces public disclosure necessities, and preempts state-level antifraud, securities, and client safety legal guidelines.

While most pensions presently don’t carry crypto belongings due to related dangers, Calemine claimed the invoice supplies a “facade of regulation” which will make crypto extra mainstream in portfolios, permitting the proliferation of belongings traders will wrongly understand as secure.

Industry Pushes Forward as Regulators Signal Friendlier Stance

The draft Responsible Financial Innovation Act, launched in July by Senate Banking Chair Tim Scott alongside Senators Cynthia Lummis, Bill Hagerty, and Bernie Moreno, proposes specific recognition that digital belongings referred to as “ancillary belongings” should not inherently securities.

The laws makes an attempt to resolve jurisdictional pressure between the SEC and the CFTC, with most digital belongings regulated as commodities underneath the CFTC, whereas the SEC retains oversight of funding contracts and investor safety.

A revised September 7 draft launched protections for DeFi builders and rising blockchain sectors, equivalent to DePINs, proposing the formation of a Joint Advisory Committee on Digital Assets comprising SEC and CFTC members.

Developers contributing to decentralized protocols, validators, liquidity suppliers, and pockets builders wouldn’t routinely fall underneath conventional monetary rules if protocols aren’t centrally managed.

Airdrops, staking rewards, and liquid-staking outputs are outlined as “gratuitous distributions” quite than securities choices.

Last month, SEC Chair Paul Atkins announced the company would finish “regulation by enforcement,” giving companies preliminary notices of technical violations and up to six months to tackle points earlier than enforcement is taken into account.

Since taking workplace in April, Atkins has dropped a number of high-profile instances inherited from Gary Gensler’s tenure and launched a Crypto Task Force.

He rejected the broad classification of cryptocurrencies as securities, displaying openness to tokenized shares and bonds that mirror current devices.

Little earlier than then, CFTC Acting Chair Caroline D. Pham outlined on September 8 a cross-border framework permitting international crypto exchanges to function underneath U.S. regulatory frameworks, doubtlessly widening market entry for American merchants.

Pham famous many American crypto companies moved operations overseas, citing an absence of clear guidelines, with jurisdictions in Europe, Asia, and the Middle East creating digital asset frameworks that drew firms away.

The publish Largest US Union Federation Opposes Crypto Bill, Says It Exposes Workers’ Retirement Funds to Risk appeared first on Cryptonews.

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