The American Federation of Teachers (AFT) has formally added its voice to the growing opposition against the proposed crypto market structure bill, urging the Senate Banking Committee to reconsider the legislation.
In a letter obtained by CNBC, AFT President Randi Weingarten described the bill as “as irresponsible as it is reckless,” citing the alleged dangers it poses to working families’ pensions and the overall economy.
AFT Calls Out Loopholes In Crypto Legislation
In her correspondence with Senate Banking Committee Chairman Tim Scott and Ranking Member Elizabeth Warren, who is known for her consistent skepticism toward digital assets, Weingarten expressed significant concern about the implications of the proposed legislation.
She stated that the current draft gives the AFT “deep concern” over the risks posed to retirement plans, including the union’s own pensions. Weingarten argued that advancing the crypto legislation could open the door to “widespread fraud” and “unethical practices” within retirement schemes.
Weingarten alleged that the bill “misleadingly” portrays cryptocurrencies as stable and mainstream, despite their volatility. She argued that rather than providing necessary safeguards. “If passed, it will undercut the safety of many assets and cause problems across retirement investments,” she noted.
Among the specific concerns raised by the AFT was a provision allowing non-crypto companies to issue their stock on the blockchain, thus evading existing regulatory frameworks for securities.
Weingarten warned that this loophole and the corresponding erosion of traditional securities laws could have “disastrous outcomes.” She noted that pensions and 401(k) plans may end up invested in unsafe assets, even when they are nominally traditional securities.
Additionally, she criticized the legislation for inadequately addressing the fraud and illegal activities that Weingarten believes remain prevalent in crypto markets, labeling it “irresponsible” and “reckless.”
Delays And Heightened Concerns
In the letter, Weingarten also stressed that if the bill were to become law, it could potentially set the stage for the next financial crisis. The AFT’s stance aligns with concerns previously expressed by the AFL-CIO, the nation’s largest labor union, which also opposed a draft of the crypto bill in October.
In line with Weingarten’s opposition, Democratic senators, including Warren, have raised concerns regarding the balance of regulatory oversight between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
Massachusetts Secretary of State William Galvin reiterated these concerns in a letter, highlighting that the proposed legislation could exclude significant portions of the financial industry from state oversight, creating risks for millions of savers.
Progress on the Senate’s version of the crypto market structure bill has faced delays, partly attributed to the recent lengthiest government shutdown in US history.
Senator Lummis recently provided insight into potential timelines, indicating that her goal is to share a new draft by the end of the week. She plans to allow both the crypto industry and lawmakers from both parties to review the draft before moving forward with markup next week.
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