The American Federation of Teachers just fired a warning shot at Capitol Hill's crypto ambitions. The powerful union representing 1.8 million teachers is urging senators to pump the brakes on the Responsible Financial Innovation Act, calling it "as irresponsible as it is reckless" in a letter obtained by CNBC. AFT president Randi Weingarten warns the legislation poses "profound risks" to teachers' pensions and could trigger the next financial crisis.
The American Federation of Teachers just threw a major wrench into Congress's crypto plans. The union representing 1.8 million teachers across America is demanding the Senate Banking Committee reconsider the Responsible Financial Innovation Act, warning it could devastate retirement security for working families.
In a blistering letter sent to Chairman Tim Scott and Ranking Member Elizabeth Warren, AFT president Randi Weingarten didn't mince words. She called the proposed legislation "as irresponsible as it is reckless," arguing it poses "profound risks to the pensions of working families and the overall stability of the economy."
The timing couldn't be worse for crypto advocates. Senate Republicans need at least seven Democratic votes to pass their market structure bill, and organized labor's fierce opposition adds ammunition to already skeptical Democrats. The AFL-CIO already voiced similar concerns in October, creating a united front against the legislation.
Weingarten's main fear centers on tokenization - the process of putting traditional assets on blockchain networks. BlackRock CEO Larry Fink has been evangelizing this concept, calling it the future of all financial assets. But the AFT sees a dangerous loophole that could expose teachers' retirement funds to crypto market volatility without their knowledge.
"This legislation pretends that crypto assets are stable and mainstream, and they are not," Weingarten wrote in the letter obtained by CNBC. "Rather than just being silent on crypto, this bill strips the few safeguards that exist for crypto and erodes many protections for traditional securities."
The union's specific concern targets a provision allowing non-crypto companies to put their stock on blockchain networks while evading existing securities regulations. Under current law, if a teacher's pension fund buys traditional stock, it's protected by decades of securities law. But if that same company tokenizes its shares, those protections could evaporate.
