Big labor union sounds alarm on bill threatening retirement funds

The Growing Debate Over Digital Asset Regulation in the U.S.

The ongoing debate over how to regulate digital assets in the United States has intensified this week, with one of the country’s largest labor unions warning Congress that a proposed crypto bill could jeopardize retirement savings. At the same time, Wall Street is starting to explore the potential of tokenized stocks, a development that unions argue the legislation fails to address adequately.

Tokenized stocks are digital representations of traditional company shares that exist on a blockchain. Despite their digital nature, they still carry the same ownership and rights as conventional stock. This emerging trend is at the center of a growing conflict between labor unions, financial institutions, and lawmakers.

AFT Warns of Risks to Pensions

The American Federation of Teachers (AFT), a union representing 1.8 million members, has called for the Senate Banking Committee to withdraw the Responsible Financial Innovation Act, labeling it “as irresponsible as it is reckless.” According to a letter obtained by CNBC, AFT President Randi Weingarten expressed concerns that the bill would expose working families to economic risks and threaten the stability of their retirement security.

Weingarten argued that the bill could allow non-crypto companies to tokenize their stock, potentially bypassing existing securities regulations. This could lead to pension plans unknowingly holding blockchain-issued assets that come with different and unanticipated risks.

In her words:

“This loophole… will have disastrous consequences: Pensions and 401(k) plans will end up having unsafe assets even if they were invested in traditional securities.”

She also criticized the draft bill for “stripping the few safeguards that exist for crypto and eroding many protections for traditional securities,” warning that it could “lay the groundwork for the next financial crisis.”

Wall Street Moves Toward Tokenization

While the AFT raises concerns, Wall Street is already taking steps toward tokenized stocks. On Wednesday, Superstate, a fintech firm founded by Compound creator Robert Leshner, launched its Direct Issuance Programs. This initiative allows SEC-registered public companies to issue newly minted tokenized shares on Ethereum and Solana.

The program enables companies to raise capital directly from investors who pay in stablecoins, with tokens settling instantly and shareholder records updating on-chain. Superstate CEO Leshner emphasized the need for infrastructure that supports instant settlement, transparent participation, and compliance by design.

“Primary issuance needs rails that support instant settlement, transparent participation, and compliance by design - not bolted-on workarounds.”

The first tokenized-equity offerings are expected to go live in 2026. In other words, the technology that the AFT is warning about is already here—and about to scale.

Washington Races to Finalize Crypto Rules

With the AFT’s warnings, Superstate’s new capital-raising program, and regulators showing openness to tokenization, Congress faces an increasingly tight timeline. Sen. Cynthia Lummis said the goal is to publish a draft of the bill this week and vote on it next week as the Senate works to reconcile versions of the crypto market-structure bill across committees.

However, critics—including the AFT, AFL-CIO, several state regulators, and key Senate Democrats—argue that tokenized securities require more protections, not fewer. While tokenized stocks promise faster settlement, lower costs, and programmable compliance, unions fear these same features could create vulnerabilities in retirement portfolios.

The Convergence of Interests

The debate now sits at the intersection of three key players: unions, Wall Street, and Capitol Hill. Unions are pushing for strict guardrails to protect workers’ savings, while firms like Superstate are building the infrastructure needed for tokenization. Meanwhile, Congress is racing to write rules before the market outpaces regulation.

Whether tokenized equities become a safer upgrade to traditional finance or a new systemic risk may depend on how this bill is rewritten in the coming days. The stakes are high, and the outcome could shape the future of both finance and retirement security in the U.S.