tl;dr
The AFL-CIO opposes the Senate’s crypto bill, calling it a 'facade of regulation' that risks worker pensions, financial stability, and taxpayer-backed insurance funds amid warnings of 2008-style systemic dangers.
**AFL-CIO Opposes Senate Crypto Bill, Citing Worker and Financial Risks**
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest federation of trade unions in the United States, has raised significant concerns about the Senate’s draft legislation to regulate cryptocurrency, calling it a "facade of regulation" that fails to protect workers and risks destabilizing the financial system.
In a letter to the Senate Banking Committee on Tuesday, the AFL-CIO criticized the *Responsible Financial Innovation Act* (RFIA), introduced in 2022 by Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), and revised earlier this year. The union argued that the bill would enable the crypto industry to operate with "insufficient oversight" while exposing workers and retirement funds to heightened risks.
**Worker Protections and Retirement Risks**
Jody Calemine, director of the AFL-CIO, warned that the RFIA poses "significant risks to workers and the financial system." He highlighted that the bill could allow retirement plans such as 401(k)s and pensions to hold volatile crypto assets, increasing workers’ exposure to market swings. "The bill provides the facade of regulation but fails to insulate workers from the volatility of this asset class," Calemine stated.
The union also expressed concern about the potential impact on the taxpayer-backed Deposit Insurance Fund, which safeguards consumer bank deposits. If banks were permitted to custody crypto, the fund could face greater risks, Calemine said.
**Systemic Risks and Shadow Markets**
The AFL-CIO criticized the RFIA for "codifying the tokenization of securities and assets," which could enable private companies to create a "shadow public stock" outside the oversight of the Securities and Exchange Commission (SEC). This, the union argued, would undermine existing regulatory frameworks and create new vulnerabilities.
Calemine drew a stark comparison to the 2008 financial crisis, warning that the bill’s provisions could allow banks to engage in high-risk crypto-based trading activities "even riskier than some of the dangerous financial activities" that preceded the collapse.
**Context and Ongoing Debate**
The RFIA is being developed by the Senate Banking Committee as an alternative to the *CLARITY Act*, a market structure bill passed by the House in July. While the AFL-CIO supports updating regulations to protect workers, it contends that the RFIA lacks meaningful safeguards. The bill remains a discussion draft and has not yet been formally introduced.
The union’s opposition underscores the growing tension between fostering innovation in the crypto sector and ensuring consumer and worker protections. As Congress debates how to regulate digital assets, the AFL-CIO’s stance highlights the need to balance technological advancement with financial stability and labor rights.
In its letter, the AFL-CIO called on lawmakers to reject the RFIA, emphasizing that "the risks outlined in this bill are too great to ignore." The debate over crypto regulation continues to shape the future of financial policy in the U.S.