The American Federation of Teachers, representing 1.8 million members, has urged the U.S. Senate to withdraw the Responsible Financial Innovation Act, arguing it poses material risks to the $39 trillion retirement market. The union frames its appeal around a tokenization provision in the crypto market structure bill, linking a regulatory change to potential erosion of long-term investor protections. This intervention reframes the legislative debate as one about pension safety rather than innovation alone.
Crypto market structure bill: tokenization loophole
A central technical objection from the union targets a clause that would permit non-crypto companies to tokenize equity on blockchain networks without standard registration or reporting. Tokenization is the process of representing ownership rights as digital tokens on a blockchain. The AFT warns this mechanism could circumvent securities registration, reporting obligations and intermediary oversight, creating assets that lack the traceability and disclosure standards used to underwrite fiduciary risk in pensions and 401(k)s.
The bill’s sponsors and procedural context cited in public discussion include Senators Cynthia Lummis and Kirsten Gillibrand as original proponents, with the Senate Banking Committee chaired by Senator Tim Scott and Senator Bernie Moreno noted as a co-sponsor. Those attributions indicate bipartisan sponsorship even as the provision generates cross-aisle resistance, underscoring the salience of the tokenization debate within broader market-structure considerations.
Risk assessment, regulatory allocation and systemic exposure
The union characterizes the legislation as weakening existing protections and treating crypto assets as if they were already stable and mainstream—an assumption it rejects. It argues that the proposed reallocation of oversight, which could shift some authority away from the Securities and Exchange Commission toward the Commodity Futures Trading Commission, risks creating regulatory gaps rather than clarity. Randi Weingarten, president of the AFT, summarized the union’s stance succinctly: “as irresponsible as it is reckless”. Other labor organizations, including the AFL‑CIO, have echoed concerns, framing the issue as one of safeguarding long-term retirement outcomes rather than stifling technological development. In this framing, the primary operational risk is the introduction of speculative instruments into asset pools designed for predictable, long-duration returns, an alteration of investor composition with implications for portfolio volatility and liability matching.
Broader context includes ongoing international efforts to define digital-asset rules; the statement notes parallel regulatory activity in jurisdictions pursuing comprehensive frameworks, underscoring that the U.S. decision will sit alongside other national models. For product teams and compliance functions, the union’s critique signals potential requirements—rigorous registration processes, enhanced reporting pipelines, and retained intermediary accountability to preserve auditability and fiduciary traceability if tokenized securities move toward market adoption.
The union’s intervention reframes the bill as a retirement-safety issue and places pressure on Senate leadership to either amend or withdraw the proposal to avoid introducing tokens into regulated pension holdings without conventional securities safeguards. The next verified milestone will be whether Senate leadership advances the measure or pauses to negotiate stronger investor protections.
