The American Federation of Teachers, the powerful labor union that represents 1.8 million members, is urging the Senate Banking Committee to reconsider its crypto market structure bill, the Responsible Financial Innovation Act, calling the proposed legislation "as irresponsible as it is reckless" in a letter exclusively obtained by CNBC.
In the letter that AFT president Randi Weingarten sent to Senate Banking Committee Chairman Tim Scott (R-SC) and Ranking Member Elizabeth Warren (D-Mass.), she wrote the union opposes the bill based on the "profound risks to the pensions of working families and the overall stability of the economy."
"The legislation on crypto we have seen weighed by the committee over the last few months gives us deep concern," Weingarten added.
The AFT is concerned that in passing crypto legislation, the government will open the floodgates to widespread fraud and unethical practices across retirement plans including AFT pensions.
"This legislation pretends that crypto assets are stable and mainstream, and they are not. Rather than just being silent on crypto, this bill strips the few safeguards that exist for crypto and erodes many protections for traditional securities. If passed, it will undercut the safety of many assets and cause problems across retirement investments," Weingarten wrote.
A specific issue the AFT cited with the proposed legislation it allowing non-crypto companies to put their stock on the blockchain and evade existing securities regulatory framework. Wall Street has become interested in the idea of "tokenization" of all financial assets, with Larry Fink, CEO of BlackRock , the largest asset manager in the world, a leader evangelist for the concept.
"This loophole and the erosion of traditional securities law will have disastrous consequences: Pensions and 401(k) plans will end up having unsafe assets even if they were invested in traditional securities," Weingarten wrote.
She argued that the legislation being considered by the committee also does little to curb fraud, illegal activity and corruption that continues to be prevalent in crypto markets. Weingarten called the legislation "irresponsible" and "reckless."
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