Teachers Union Warns of Retirement Fund Risks in Crypto Market Structure

AFT Opposes Crypto Market Legislation, Citing Retirement Risks

The American Federation of Teachers (AFT), a prominent union representing educators in the United States, has raised concerns over proposed legislation related to the structure of the cryptocurrency market. In a recent letter sent to both Republican and Democratic leaders on the US Senate Banking Committee, the AFT expressed its opposition to the Responsible Financial Innovation Act, arguing that it poses a threat to the stability of retirement security.

According to the letter obtained by CNBC, the AFT claims that the bill fails to establish a regulatory framework for crypto assets and stablecoins that is comparable to that of traditional pension investments. The union emphasized that most pensions do not include crypto assets due to their high risk. The AFT argues that the legislation incorrectly portrays digital assets as stable and mainstream, which they are not.

The CLARITY Act, a draft of the market structure bill proposed by the Senate Banking Committee in July, did not explicitly address the inclusion of digital assets in pensions or retirement funds. Similarly, a November draft from the Senate Agriculture Committee also omitted such provisions. The AFT warns that if the bill passes, "Pensions and 401(k) plans will end up having unsafe assets even if they were invested in traditional securities."

The American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) has also voiced similar concerns, stating that the market structure bill could pose risks to "retirement funds and to the overall financial stability of the US economy." The group claims that the legislation would increase workers' exposure to risky assets by allowing retirement plans like 401(k)s and pensions to hold digital assets.

Broader Implications for Retirement Funds

The AFT represents 1.8 million members working in education, healthcare, and public services. According to the National Association of State Retirement Administrators, aggregate public pension assets, including those of teachers, totaled more than $6.5 trillion as of the second quarter of 2025. Meanwhile, the Investment Company Institute reported in September that total retirement assets in the US reached about $45.8 trillion.

President Donald Trump has also addressed the issue of cryptocurrencies in retirement funds through executive orders. In August, he signed an executive order directing the Labor Department to reevaluate restrictions around alternative assets in defined-contribution plans, including digital assets.

Industry Moves Toward Crypto Integration

Asset management companies have already begun exploring the inclusion of digital assets in individual retirement arrangements (IRAs) and 401(k)s. In October, Morgan Stanley reportedly started allowing its advisers to suggest crypto funds as part of clients’ retirement portfolios. Additionally, state-managed retirement funds, such as those in Michigan and Wisconsin, have exposure to crypto through digital asset-linked exchange-traded funds.

Despite these developments, the future of the Senate's market structure bill remains uncertain. Wyoming Senator Cynthia Lummis, one of the bill’s most vocal supporters, stated on Tuesday that she expects the banking committee to release an updated draft this week, with a possible markup hearing before Congress breaks for the holidays.

Ongoing Debate Over Regulation

The debate over how to regulate cryptocurrencies continues to gain momentum. While some lawmakers and industry players see potential benefits in integrating digital assets into retirement accounts, others, like the AFT and AFL-CIO, remain cautious. They argue that without proper safeguards, the inclusion of crypto in retirement plans could expose millions of Americans to unnecessary financial risks.

As the discussion unfolds, the role of regulators, policymakers, and financial institutions will be critical in shaping the future of retirement investing in the digital age.