The largest labor federation in the United States has expressed "serious concerns" about the Senate's draft bill regulating cryptocurrency, claiming that the bill lacks protections for workers and is insufficiently regulated for the industry.
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) opposes the Responsible Financial Innovation Act (RFIA), arguing in a letter to the Senate Banking Committee on Tuesday that the bill poses significant risks to workers and the financial system.
AFL-CIO Director Jody Calemine stated that the bill's treatment of crypto assets "poses risks to retirement funds and the overall financial stability of the U.S. economy."
He added that the bill would allow the cryptocurrency industry to "operate in our financial system in a broader and deeper way without adequate oversight or meaningful protections."
Senators Cynthia Lummis and Kirsten Gillibrand initially introduced the RFIA in 2022 and revised it earlier this year. The Senate Banking Committee is developing the bill as an alternative to regulate cryptocurrency, with different scopes and regulatory focuses, rather than advancing the market structure bill "CLARITY Act" passed by the House in July.
Calemine stated that the AFL-CIO "supports efforts to update the regulatory framework to better protect workers from the volatility of this asset class," but the bill merely "provides the appearance of regulation."
He added that the bill does not protect workers from the volatility of cryptocurrency but instead "increases workers' risk exposure by allowing retirement plans like 401(k)s and pensions to hold such risky assets."
Calemine also claimed that if banks are allowed to custody cryptocurrencies, the taxpayer-supported deposit insurance fund that protects consumer bank deposits would face greater risks.
He further stated that the legislation "codifies the tokenization of securities and assets," providing private companies a way to "create shadow public stocks" outside the supervision of the Securities and Exchange Commission.
The AFL-CIO headquarters is located in Washington, D.C. Source: AFL-CIO
The AFL-CIO compared these potential risks to those that led to the 2008 financial crisis, which was caused by high-risk lending by commercial banks.
Calemine ultimately called for opposition to the Responsible Financial Innovation Act, which remains a discussion draft and has not been formally introduced.
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Original article: “Major U.S. Labor Union Claims Senate Cryptocurrency Bill Lacks ‘Meaningful Protections’”
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