Labor Union Flags Major Risk in Senate’s Crypto Bill

The AFL-CIO, the largest labor federation in the US, sent a letter on Monday to members of the Senate Banking Committee opposing a draft bill that would create a regulatory framework for digital asset trading.

The opposition raises concerns about the passage of the proposed Responsible Financial Innovation Act (RFIA), a delay that could hinder market growth.

Why Are Labor Unions Opposing Crypto Bills?

Why would a labor union oppose a crypto regulation bill? In a statement, Jody Calemine, Chief Legal Officer of the AFL-CIO, linked crypto deregulation to workers’ pensions.

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He argued that allowing retirement funds to pour into volatile crypto assets could threaten the overall financial stability of the US economy.

“This bill’s treatment of crypto assets poses risks to both retirement funds and to the overall financial stability of the US economy…The Responsible Financial Innovation Act (RFIA) would increase workers’ exposure by greenlighting retirement plans like 401(k)s and pensions to hold this risky asset,” Calemine said.

The RFIA for the Crypto Industry

The RFIA, which the AFL-CIO opposes, was first introduced in 2022 by Senators Cynthia Lummis and Kirsten Gillibrand, both considered to be pro-crypto political figures.

The US Senate is adopting a legislative strategy to largely replace and expand upon the CLARITY Act by introducing the RFIA.

The RFIA includes several clauses aimed at stimulating the crypto industry. For example, if passed, NFTs and Decentralized Physical Infrastructure Networks (DePIN) would be exempt from registration and business operator regulations. It would also introduce a “CFTC-SEC Micro-Innovation Sandbox,” allowing startups to experiment with new businesses under regulatory exemptions for two to three years.

In a separate letter released earlier in July, the AFL-CIO directly urged Democratic lawmakers to either ensure clear investor and worker protections or vote against the bill. As a result, some Democratic candidates expressed reservations or opposition to the bill alongside their conservative counterparts.

With a large number of voters as its members, the AFL-CIO holds considerable influence in US politics. Senator John Kennedy, a senior Republican on the Senate Banking Committee, officially stated in September that a crypto market structure bill should not be rushed.

Calemine criticized the bill, stating, “While the labor movement agrees on improving the regulatory framework to protect workers from the volatility and risks of digital assets, this bill is nothing more than a ‘hollow law’ disguised as regulation.”