The AFL-CIO, the largest federation of US trade unions, told the Senate Banking Committee on Tuesday that it has “serious concerns” about the draft Responsible Financial Innovation Act. The union said the bill would let crypto play a bigger role in the financial system.
It argued this could harm workers, retirement plans and overall market stability. The letter calls out weak safeguards and urges lawmakers to rethink the plan before it moves forward.
AFL-CIO raises alarms
The federation’s director, Jody Calemine, said the bill’s approach to crypto assets “poses risks to both retirement funds and to the overall financial stability of the US economy.”
He warned the draft would let the crypto sector “operate in wider and deeper ways in our financial system without sufficient oversight or meaningful safeguards.” The union framed its opposition as a defence of workers and savers.
Threat to workers and pensions
Calemine said the RFIA “supports efforts to update regulatory regimes to better protect workers,” but that the draft itself “provides the facade of regulation.”
He argued the bill would not shield people from crypto’s ups and downs. Instead, it would open the door for retirement plans, like 401(k)s and pensions, to hold crypto. The AFL-CIO said that step would “increase workers’ exposure” to a risky asset class.
Deposit Insurance Fund and custody concerns
The union also raised alarms about banks holding crypto. Calemine claimed the Deposit Insurance Fund, which backs bank deposits, could be put at greater risk if banks custody cryptocurrencies.
The letter suggested that blending bank activities with crypto custody could bring new, systemic vulnerabilities into the traditional banking safety net.
Tokenisation and oversight gaps
A second major worry is how the bill treats tokenised securities. The AFL-CIO said the draft “codifies the tokenisation of securities and assets” in ways that could let private companies create what the union called a “shadow public stock” outside of current SEC oversight.
The letter likened the potential result to a parallel market that may not face the same checks and rules as public markets.
Comparisons to past crises
The federation pointed to history to underline its concerns, and its filing compared the possible risks from the RFIA to those that helped cause the 2008 financial crisis, saying the bill could revive high-risk bank activities linked to crypto.
The letter warned that “Banks engaging in crypto-based hedge fund trading activity, which would be allowed under this regime, could be even riskier than some of the dangerous financial activities conducted before the 2008 financial crisis.”
Regulatory backdrop
The RFIA was first introduced by Senators Cynthia Lummis and Kirsten Gillibrand in 2022 and was updated earlier this year. The Senate Banking Committee is now developing the draft as one path to set crypto rules.
Backers see it as an alternative to the CLARITY Act, which the House passed in July. The AFL-CIO says the Senate draft needs stronger worker protections before it advances.
The AFL-CIO’s letter asks senators to step back and tighten the rules. Calemine closed by urging lawmakers to oppose the draft in its current form.
The RFIA remains a discussion document and has not been formally introduced, so changes are still possible. Lawmakers on the committee will weigh the federation’s concerns alongside industry and regulatory views in the weeks ahead.
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