Nikolas Sargeant
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest federation of trade unions in the United States, has expressed serious concerns about the Senate's draft cryptocurrency regulation bill. In a letter to the Senate Banking Committee, the labor organization argued that the Responsible Financial Innovation Act lacks adequate worker protections and fails to properly regulate the digital asset sector.
AFL-CIO director Jody Calemine warned that the legislation poses significant risks to retirement funds and the overall stability of the U.S. financial system. Rather than protecting workers from cryptocurrency volatility, Calemine said the bill would increase their exposure by allowing retirement plans like 401(k)s and pensions to hold these risky assets. The union leader criticized the bill as providing only "the facade of regulation" while enabling the crypto industry to operate with insufficient oversight.
The labor federation also raised concerns about systemic risks to the broader financial system. Calemine noted that the taxpayer-backed Deposit Insurance Fund would face greater risk if banks were permitted to custody cryptocurrency. Additionally, he warned that the bill's provisions on tokenizing securities and assets could allow private companies to create unregulated markets outside Securities and Exchange Commission oversight.
The AFL-CIO compared these potential risks to those that triggered the 2008 financial crisis, suggesting that allowing banks to engage in crypto-based trading activity could be even more dangerous than the risky financial practices that preceded the previous economic collapse. The Responsible Financial Innovation Act, originally introduced by Senators Cynthia Lummis and Kirsten Gillibrand in 2022 and revised earlier this year, remains a discussion draft and has not yet been formally introduced.
The AFL-CIO's concerns echo broader Democratic opposition to the Republican-drafted legislation. Democratic staff members of the Senate Banking Committee have described the GOP crypto bill as a "superhighway" for assets seeking to evade regulatory oversight, warning that it would allow traditional financial assets to escape Securities and Exchange Commission authority simply by converting to digital formats. This criticism highlights the continuing partisan divide over cryptocurrency regulation, with Democrats favoring stricter oversight while Republicans advocate for more industry-friendly frameworks.
