A widening split has developed in Washington, D.C., between the cryptocurrency sector and labor unions as lawmakers discuss relaxing regulations that would permit cryptocurrencies in 401(k) retirement plans.
This disagreement revolves around proposed market structure legislation permitting retirement accounts to gain crypto exposure, a step that labor organizations argue could subject workers to speculative risks. In a letter sent Wednesday to the US Senate Banking Committee, the American Federation of Teachers contended that cryptocurrencies are too volatile for pension and retirement savings, cautioning that workers might endure significant losses.
The letter received immediate backlash from crypto investors and industry representatives. “The American Federation of Teachers has somehow crafted the most logically incoherent, least educated stance one could possibly write regarding crypto market structure regulation,” a crypto investor remarked on X.
In response to the letter, Castle Island Ventures partner Sean Judge asserted that the bill would enhance oversight and mitigate systemic risks, while allowing pension funds to access an asset class known for strong long-term returns.
Consensys attorney Bill Hughes stated that the AFT’s resistance to the crypto market structure bill was politically driven, alleging that the group functions as an arm of Democratic lawmakers.
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Opposition to crypto in retirement and pension funds grows
Advocates for incorporating crypto in retirement portfolios assert that it democratizes finance, while trade unions have expressed strong opposition to relaxing current rules, arguing that crypto is too risky for conventional retirement plans.
“Unregulated, risky currencies and investments are not suitable 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 observed on Thursday.
The AFT represents 1.8 million teachers and educational professionals in the US, making it one of the country’s largest teachers’ unions.
According to Better Markets, a nonprofit and nonpartisan advocacy organization, cryptocurrencies are excessively volatile for traditional retirement portfolios, and their high volatility can lead to time-horizon mismatches for pension investors looking for a predictable, low-volatility retirement plan.
In October, the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) also contacted Congress to voice opposition to elements within the crypto market structure regulatory bill.
The AFL-CIO, the largest federation of trade unions in the US, stated that cryptocurrencies are volatile and present systemic risks to pension funds and the wider financial system.
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