A widening divide is surfacing in Washington, D.C., between the cryptocurrency sector and labor unions as legislators discuss the potential easing of regulations to permit cryptocurrencies in 401(k) retirement accounts.
The conflict revolves around proposed market structure legislation that seeks to allow retirement accounts to invest in crypto, a change that labor groups argue could put workers at speculative risk. In a letter sent on Wednesday to the US Senate Banking Committee, the American Federation of Teachers warned that the volatility of cryptocurrencies makes them unsuitable for pension and retirement savings, cautioning that significant losses could occur for workers.
The letter received immediate backlash from crypto investors and industry leaders. “The American Federation of Teachers has somehow produced the most logically flawed, least informed perspective imaginable regarding crypto market structure regulation,” a crypto investor stated on X.
In reaction to the letter, Castle Island Ventures partner Sean Judge asserted that the proposed bill would enhance oversight and minimize systemic risks while allowing pension funds access to an asset class with a history of strong long-term returns.
Consensys attorney Bill Hughes remarked that the AFT’s opposition to the crypto market structure bill was politically driven, claiming the organization acts as a proxy for Democratic legislators.
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Opposition to crypto in retirement and pension funds intensifies
Advocates for including crypto in retirement portfolios contend that it democratizes finance, while trade unions have strongly opposed the easing of current regulations, asserting that crypto remains too risky for conventional retirement plans.
“Unregulated, high-risk currencies and investments are not appropriate for pensions and retirement savings. We don’t need the ‘wild west,’ whether it’s crypto, AI, or social media,” AFT president Randi Weingarten stated on Thursday.
The AFT represents 1.8 million educators and educational professionals in the US and is one of the largest teachers’ unions nationwide.
According to Better Markets, a nonprofit and nonpartisan advocacy group, cryptocurrencies are excessively volatile for traditional retirement portfolios, leading to possible time-horizon mismatches for pension investors looking for stable, low-volatility retirement plans.
In October, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) also addressed Congress to oppose aspects of the crypto market structure regulatory bill.
The AFL-CIO, the largest trade union federation in the US, stated that cryptocurrencies are volatile and create systemic risks for pension funds and the wider financial system.
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