AFL-CIO Warns Responsible Financial Innovation Act Could Expose Workers’ Retirement Funds to Bitcoin, Raise FDIC Risk

The Responsible Financial Innovation Act would allow FDIC-backed banks to custody and trade crypto, a move the AFL-CIO says increases pension and 401(k) exposure and weakens investor protections, raising systemic risk without stronger consumer and enforcement safeguards. AFL-CIO warns the bill increases worker exposure to crypto via retirement plans Senate draft would permit FDIC-insured banks to directly hold and trade crypto Union cites risk to the FDIC Deposit Insurance Fund and potential SEC regulatory evasion Responsible Financial Innovation Act faces AFL-CIO opposition over FDIC-backed crypto risks; read analysis, key takeaways, and next steps.

(150 characters) Responsible Financial Innovation Act faces AFL-CIO opposition over FDIC-backed crypto risks; read concise analysis and next ￰0￱ ￰1￱ is the Responsible Financial Innovation Act and why does the AFL-CIO oppose it? The Responsible Financial Innovation Act is a Senate draft bill that would allow FDIC-insured banks to custody and trade crypto and codify blockchain-based token ￰2￱ AFL-CIO opposes it as written, saying it would weaken federal and state enforcement, expose pensions and 401(k)s to crypto volatility, and increase risk to the FDIC Deposit Insurance ￰3￱ would allowing banks to trade crypto affect worker retirement funds? Permitting banks to custody crypto for retirement plans would make pensions and 401(k)s direct holders of volatile ￰4￱ AFL-CIO letter warns this increases workers’ exposure to price swings and potential ￰5￱ union argues current provisions could erode safeguards that historically protect retirement ￰6￱ specific risks did the AFL-CIO highlight?

The federation flagged several risks: potential losses and bank failures that could draw on FDIC resources, the emergence of blockchain-based “shadow stocks” trading apart from securities laws, and the possibility of tokenization enabling issuers to evade SEC ￰7￱ concerns reference historical contagion in unregulated derivatives ￰8￱ does the crypto industry respond to union concerns? Industry figures quoted in reporting contest the AFL-CIO ￰9￱ Stadelmann (Komodo Platform) called union resistance to crypto adoption “costly,” predicting 401(k)s will hold Bitcoin over ￰10￱ Mishra (ChaiDEX) agreed the bill “codifies a separate, loosely regulated parallel market,” urging stronger transparency and liquidity guardrails if banks custody crypto. , "description": "The AFL-CIO warns the Senate's Responsible Financial Innovation Act would expose retirement funds and the FDIC Deposit Insurance Fund to heightened crypto risks without stronger consumer protections.", , "publisher": When could the Senate vote on the bill?

Senators Cynthia Lummis and Kirsten Gillibrand introduced the draft and signaled urgency to pass legislation by ￰11￱ leaders discussed a possible vote in ￰12￱ requires broader bipartisan support—at least seven additional Democratic votes to reach cloture in the current Senate ￰13￱ reforms do experts say are essential if banks custody crypto? Experts call for clear guardrails: robust on-off ramp liquidity, comprehensive transparency requirements, and stronger regulatory authority to prevent tokenization from evading securities ￰14￱ measures aim to avoid contagion risks similar to past financial crises. , Frequently Asked Questions How would the bill change SEC authority over tokenized assets?

The AFL-CIO warns tokenization provisions could allow issuers to evade SEC oversight by reclassifying securities as blockchain-native tokens, reducing federal enforcement tools and state protections designed to prevent ￰15￱ retirement plans legally invest in crypto under the draft? ￰16￱ draft contains provisions that would permit 401(k)s and pensions to hold crypto assets, a change the AFL-CIO argues would increase workers’ exposure to market volatility and undermine existing ￰17￱ Takeaways Legislative change : The Responsible Financial Innovation Act would permit FDIC-insured banks to custody and trade ￰18￱ concerns : AFL-CIO warns increased risk to pensions, 401(k)s, and the FDIC Deposit Insurance Fund without stronger ￰19￱ calls : Industry experts demand transparency, liquidity protections, and preserved SEC authority if the bill ￰20￱ can regulators and plan sponsors limit risk?

(How-to steps) Implement strict custody and segregation rules for crypto held by ￰21￱ real-time transparency and reporting of tokenized assets and trading ￰22￱ SEC authority over tokenized securities and enforce anti-fraud ￰23￱ exposure limits for retirement plans and require fiduciary due ￰24￱ contingency funding protocols for FDIC and other backstops. , Conclusion The Responsible Financial Innovation Act would mark a major shift by allowing FDIC-backed banks to custody and trade crypto, prompting strong opposition from the AFL-CIO over worker protections and systemic ￰25￱ must balance innovation with clear guardrails—transparency, liquidity, and preserved enforcement—to protect retirement savers and the financial safety ￰26￱ informed as the Senate advances debate and possible votes before year-end.

Published: 2025-10-08 | Updated: 2025-10-08 | Author: COINOTAG