A widening gap has developed in Washington, D.C., between the cryptocurrency sector and labor unions as legislators discuss potential changes to regulations allowing cryptocurrencies in 401(k) retirement accounts.
The contention revolves around proposed market structure legislation enabling retirement accounts to invest in crypto, which labor unions argue could expose employees to speculative risks. In a letter addressed to the US Senate Banking Committee on Wednesday, the American Federation of Teachers contended that cryptocurrencies exhibit too much volatility for pension and retirement savings, cautioning that workers could incur substantial losses.
The letter faced swift backlash from crypto investors and industry stakeholders. “The American Federation of Teachers has somehow produced the most logically inconsistent, least informed assessment possible regarding crypto market structure regulation,” a crypto investor stated on X.
In reaction to the letter, Castle Island Ventures partner Sean Judge remarked that the bill would enhance oversight and alleviate systemic risks while allowing pension funds to tap into an asset class that has historically delivered robust long-term returns.
Consensys attorney Bill Hughes argued that the AFT’s opposition to the crypto market structure bill was politically driven, alleging that the group operates as an extension of Democratic lawmakers.
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Opposition to crypto in retirement and pension funds intensifies
Supporters of incorporating crypto into retirement portfolios contend that it democratizes finance, while labor unions have expressed considerable resistance to loosening current regulations, asserting that crypto remains too risky for established retirement plans.
“Unregulated, high-risk currencies and investments are unsuitable for pensions and retirement savings. The wild, wild west is not what we need, whether it’s crypto, AI, or social media,” AFT president Randi Weingarten declared on Thursday.
The AFT represents 1.8 million educators and education professionals in the US, making it one of the largest teachers’ unions nationwide.
According to Better Markets, a nonprofit and nonpartisan advocacy group, cryptocurrencies lack stability for traditional retirement portfolios, with their high volatility leading to mismatches in time-frame for pension investors aiming for a consistent, low-volatility retirement strategy.
In October, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) also reached out to Congress opposing elements within the crypto market structure regulatory bill.
The AFL-CIO, the largest union federation in the US, expressed that cryptocurrencies exhibit volatility and present systemic threats to pension funds and the wider financial system.
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