Union leaders are pressing U.S. lawmakers to reconsider the aft crypto bill, warning that retirement savings and financial stability could be put at risk.
AFT letter warns of systemic pension and retirement risks
The American Federation of Teachers has urged the U.S. Senate to withdraw the Responsible Financial Innovation Act, arguing it endangers pensions and the broader U.S. economy. The union, which represents 1.8 million members, focuses heavily on securing retirement. Moreover, its letter stressed that working families could face economic damage whether or not they personally hold crypto assets.
The AFT warned that the bill fails to establish adequate regulatory safeguards for crypto assets and stablecoins. In particular, it cautioned that tokenized instruments could be introduced into retirement vehicles such as traditional pensions and 401(k) plans without robust due diligence. That said, the union underlined that the threat is not limited to speculative traders but extends to mainstream savers.
According to the letter, non-crypto companies could tokenize their stock on blockchain platforms. However, these tokenized shares might sidestep existing securities laws, including registration, disclosure, and intermediary oversight. The AFT argued that such a pathway would allow tokenized equities to filter into retirement portfolios while avoiding the compliance obligations imposed on conventional securities.
Concerns over retirement security and financial stability
The union highlighted the risk that pension and 401(k) plans may end up holding unsafe digital assets, including highly volatile tokens. Current retirement systems are built on traditional securities that offer tested structures and investor protections. However, the AFT argued that the bill would open the door for those systems to absorb a far wider set of crypto and tokenized assets, undermining existing safeguards.
It claimed that this shift would weaken investor protections and reduce regulatory accountability across retirement platforms. Moreover, the letter contended that, by reclassifying or exempting certain digital instruments, the bill could lower the compliance bar for products marketed to retirement savers. The union framed this as a direct expansion of pension retirement risks into a domain that currently relies on conservative asset selection.
Beyond household savings, the AFT also raised warnings about the wider financial system. The letter argued that significant gaps in the legislation might encourage illegal activities within the crypto market. That said, it suggested these vulnerabilities could contribute to conditions for another financial crisis if left unchecked.
The union emphasized that the proposed framework does not go far enough in addressing fraud, market manipulation, and other abuses that have characterized some digital asset trading. Furthermore, it maintained that these investor protection gaps could erode public confidence in both retirement products and emerging blockchain-based financial services.
Regulatory framework and tokenization loopholes under scrutiny
The Responsible Financial Innovation Act was introduced by Senators Cynthia Lummis and Kirsten Gillibrand as a comprehensive digital asset bill. Earlier, twelve Democratic Senators signaled bipartisan support for advancing the Clarity Act in the same legislative calendar year. Together, these efforts aim to define a regulatory structure for digital assets and related financial intermediaries.
Under the bill, key terms such as digital assets and payment stablecoins would be codified in federal law. Moreover, the framework would formally allocate oversight of different segments of the market to the Securities and Exchange Commission and the Commodity Futures Trading Commission. Supporters argue that this division of authority is designed to clarify jurisdictional boundaries that have long been contested.
Opponents such as the AFT counter that, in practice, the aft crypto bill conflicts with established securities protections. They caution that by reshaping how tokenized assets are classified and supervised, the legislation could allow issuers to avoid long-standing registration and reporting requirements. In their view, this creates a parallel market where retirement investors face greater risks with fewer legal remedies.
The union argued that such tokenization loopholes regulation would weaken core investor safeguards and destabilize institutional portfolios such as pension funds. Furthermore, AFT contended that the draft does not adequately confront ongoing illegal conduct in crypto markets, from unregistered offerings to opaque trading practices. Critics fear these persistent problems could be amplified if tokenized products move deeper into mainstream retirement channels.
Senate timeline, 401(k) exposure and next steps
According to Senator Lummis, a discussion draft of the bill was expected to be released by the end of the week, with a Senate crypto vote targeted for as soon as the following week. Lawmakers are pushing to lock in a legislative framework quickly, arguing that regulatory clarity is needed for innovation to flourish. However, critics insist that speed must not come at the expense of retirement security.
Supporters maintain that the proposal would bring order to a fragmented regulatory environment, which could ultimately benefit investors. That said, AFT and allied organizations argue that the current version falls short of safeguarding pension and crypto retirement funds. They continue to lobby for tougher protections for pension and 401k retirement plans, particularly concerning any direct or indirect crypto exposure.
The debate comes as lawmakers urge the SEC to streamline rules for crypto access in $12.5 trillion in 401(k) retirement plans. Moreover, this political pressure underscores how quickly digital assets are intersecting with long-term savings. For unions, consumer advocates, and some policymakers, that intersection heightens the urgency of building robust guardrails before new products reach mass adoption.
Ultimately, the AFT petition illustrates the growing tension between cryptocurrency innovation and traditional models of investor protection. It places the spotlight on how legislative choices made in the Senate today could shape the retirement security of millions of American workers if the bill proceeds in its current form.