U.S. Teachers Push Back on Crypto Legislation, Citing Worker Risk

The American Federation of Teachers has openly challenged the Responsible Financial Innovation Act, saying the draft framework lacks meaningful safeguards for digital assets and could open back doors that funnel risk into public pension systems.

Key Takeaways

• AFT urged the Senate to withdraw a crypto regulation bill over pension risk concerns.
• The union says tokenization loopholes could bypass securities safeguards.
• Lawmakers still aim to advance the bill toward a vote next week.

Rather than celebrating the creation of a regulatory structure, the union argues the bill is too permissive — allowing crypto-linked exposure to migrate into retirement portfolios that were never designed for it.

Tokenization and Loopholes Under Scrutiny

AFT president Randi Weingarten highlighted one issue in particular: the bill’s provisions supporting tokenization of traditional equities. She warns that treating tokenized shares as if they were fully regulated securities could allow issuers to avoid disclosure requirements or compliance checks long central to financial markets.

In her view, that could leave pension funds holding instruments that look conventional but lack the oversight and recourse mechanisms investors rely on.

The union’s worries extend beyond teacher retirement accounts. Its letter points to broader economic hazards, suggesting that weak enforcement and limited controls around illicit activity could plant the seeds of future financial instability if left unaddressed.

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Lawmakers Press Forward Anyway

The bipartisan bill — championed by Senators Cynthia Lummis and Kirsten Gillibrand — aims to formally define what digital assets are and divide regulatory responsibilities between the SEC and CFTC. Staff working on the measure expect another version to be published within days, with a Senate vote potentially coming as soon as next week.

AFT’s appeal highlights rising tension between advocates pushing to normalize digital finance and institutions warning that the risks haven’t yet been fully understood.

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