America’s largest coalition of labor unions, the AFL-CIO, has voiced its disapproval of proposed legislation designed to establish a regulatory structure for digital asset trading. A letter outlining their objections was delivered to members of the Senate Banking Committee this week.
This opposition could potentially stall the progress of the Responsible Financial Innovation Act (RFIA), a development that might impede the growth of the cryptocurrency market.
Why the Labor Movement Objects to Crypto Legislation
But why would a major labor organization push back against a bill aimed at regulating cryptocurrencies? Jody Calemine, the AFL-CIO’s Chief Legal Officer, directly connected the dots between crypto deregulation and the security of workers’ retirement savings in a public release.
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Calemine argued that permitting pension funds to invest in the highly unpredictable crypto market could destabilize the entire U.S. financial system.
“The way this bill handles crypto assets poses significant risks to both workers’ retirement funds and the overall financial integrity of our nation… The Responsible Financial Innovation Act (RFIA) would needlessly increase workers’ exposure to risk by giving the green light to retirement plans like 401(k)s and pensions to include these volatile assets,” Calemine stated.
The RFIA’s Implications for the Crypto Sector
Senators Cynthia Lummis and Kirsten Gillibrand, both known supporters of the crypto industry, initially proposed the RFIA, which the AFL-CIO is now actively opposing, in 2022.
The U.S. Senate is using the RFIA as a primary tool to overhaul and expand upon the CLARITY Act, employing a broader legislative approach.
The RFIA contains several provisions designed to encourage growth within the crypto sector. If enacted, it would, for instance, exempt NFTs and Decentralized Physical Infrastructure Networks (DePIN) from standard business operation regulations and registration requirements. Furthermore, it would establish a “CFTC-SEC Micro-Innovation Sandbox,” enabling new businesses to experiment under temporary regulatory exemptions for a period of two to three years.
In a separate communication made public earlier this year, the AFL-CIO directly lobbied Democratic legislators to either ensure robust investor and worker safeguards are included in the bill or to vote against it outright. Subsequently, some Democratic candidates, alongside their conservative colleagues, have voiced concerns or outright opposition to the legislation.
Boasting a substantial membership base, the AFL-CIO wields considerable influence in American politics. Senator John Kennedy, a high-ranking Republican member of the Senate Banking Committee, asserted back in September that rushing through crypto market structure legislation would be unwise.
Calemine summarized his criticism of the bill, saying, “While the labor movement acknowledges the need to improve the regulatory landscape to shield workers from the inherent volatility and risks associated with digital assets, this particular bill is essentially a ‘hollow law’ masquerading as real regulation.”