AFL-CIO Raises Concerns Over Senate Crypto Regulation
The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), the largest federation of trade unions in the United States, has voiced “serious concerns” over the Senate’s latest draft crypto regulation proposal, arguing that it fails to protect workers, pensions, and financial stability.
In a letter addressed to the Senate Banking Committee, AFL-CIO policy director Jody Calemine criticized the Responsible Financial Innovation Act (RFIA) for giving the appearance of oversight while enabling the crypto sector to integrate more deeply into the U.S. financial system “without sufficient safeguards or transparency.”
Bill Could Expose Retirement Funds to Volatility
The AFL-CIO argued that the bill’s current provisions would “increase workers’ exposure to volatile crypto assets”, rather than insulating them from market risks.
“The bill provides the facade of regulation,” Calemine stated, adding that it could greenlight retirement plans such as 401(k)s and pensions to invest in cryptocurrencies, exposing millions of workers’ savings to highly speculative assets.
The union emphasized its support for modernized regulatory frameworks but urged lawmakers to prioritize stability, consumer protection, and systemic risk management rather than expanding institutional exposure to digital assets.
Systemic and Regulatory Oversight Risks
According to the AFL-CIO, the RFIA could also put taxpayer-backed funds at risk, particularly the Deposit Insurance Fund, if banks are allowed to custody or trade crypto assets.
Calemine further warned that the bill would “codify tokenization of securities and assets”, effectively allowing private firms to issue “shadow public stocks” beyond the Securities and Exchange Commission’s oversight.
Financial analysts have echoed similar concerns, noting that insufficient regulatory clarity could blur the lines between traditional banking and digital asset trading, increasing systemic vulnerability across markets.
Echoes of the 2008 Financial Crisis
Drawing parallels to the 2008 financial meltdown, Calemine warned that crypto-based hedge fund activities by commercial banks could amplify risks similar to those caused by subprime lending nearly two decades ago.
The Responsible Financial Innovation Act, introduced by Senators Cynthia Lummis and Kirsten Gillibrand, remains a discussion draft. The Senate Banking Committee is still refining its approach as an alternative to the House’s CLARITY Act, seeking a comprehensive framework to balance innovation with investor protection.
As policymakers debate the bill’s direction, labor groups and financial watchdogs continue to press for stronger consumer and retirement safeguards, highlighting the need for responsible integration of crypto into the U.S. financial system.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.