US teachers union urges Senate to withdraw crypto market structure bill

The American Federation of Teachers (AFT) petitioned the U.S. Senate on Monday to withdraw its crypto market structure bill, warning that the proposal poses “profound risks” to pensions and the broader U.S. economy.

In the letter, first obtained by CNBC, the union argued that the Responsible Financial Innovation Act fails to establish adequate regulatory protections for inherent risks of crypto assets and stablecoins.

“Rather than providing desperately needed regulation and commonsense guardrails, this bill exposes working families — families with no current involvement in or connection to cryptocurrency — to economic risk and threatens the stability of their retirement security,” wrote Randi Weingarten, President of AFT.

The union, which represents 1.8 million members, said in the letter that it is “fundamentally committed” to maintaining strong and safe pensions for retired workers. It opposed the bill over concerns that it could pave the way for digital assets to enter retirement portfolios, including AFT pensions.

Weingarten said a key concern is that the bill would allow non-crypto companies to tokenize their stock on the blockchain, potentially sidestepping established securities laws. She argued that this could bypass requirements for registration, reporting, and intermediary regulation, limiting avenues for investor protection and regulator accountability.

“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,” Weingarten said.

Beyond retirement pensions, the letter said the bill does little to address illegal activities in crypto markets, warning that its gaps could help set the stage for “the next financial crisis.”

The Responsible Financial Innovation Act is a bipartisan proposal aimed at creating a regulatory framework for digital assets. Originally introduced in 2022, the bill was updated with a new discussion draft from the Senate Banking Committee in September this year.

The updated bill seeks to define terms like digital assets and payment stablecoins, and assign oversight roles to the Securities and Exchange Commission and the Commodity Futures Trade Commission.

Senator Cynthia Lummis, who introduced the bill along with Sen. Kirsten Gillibrand, said Tuesday that the Senate aims to share a draft by the end of this week and vote on the act by next week.