The American Federation of Teachers (AFT) has formally opposed new cryptocurrency legislation, warning it could expose educators’ pension funds to unprecedented market volatility. In a strongly worded statement released Tuesday, the 1.7 million-member union urged lawmakers to reconsider provisions they claim would “drastically reduce regulatory oversight” of digital assets.
“When teachers retire after decades in the classroom, they deserve security, not speculation,” said Randi Weingarten, president of the AFT. “This bill creates dangerous pathways for retirement fund managers to invest in largely unregulated digital assets without adequate protections.”
The legislation, formally titled the “Digital Asset Market Structure Act,” aims to create a comprehensive framework for cryptocurrency regulation. Its supporters argue the bill would provide needed clarity for the growing industry, potentially unlocking economic opportunities while establishing reasonable guardrails.
I’ve covered congressional battles over financial regulation for nearly two decades, and the intensity of institutional opposition to this bill stands out. Sources close to the negotiations tell me the AFT’s involvement has caught bill sponsors off guard, particularly given the union’s significant political influence in key districts.
The AFT’s opposition centers on Section 404 of the proposed legislation, which would exempt certain digital assets from current securities regulations. Union analysts claim this provision creates potential loopholes allowing pension fund managers to allocate retirement assets to cryptocurrencies without traditional investor safeguards.
Dr. Teresa Ghilarducci, labor economist at The New School, explained the concerns in stark terms. “Teacher pension funds collectively manage over $3 trillion in assets. Even a small percentage shift toward volatile digital assets could jeopardize retirement security for millions of educators,” she told me during our interview last week.
The bill’s lead sponsor, Representative Patrick McHenry (R-NC), defended the legislation against these criticisms. “This framework actually increases consumer protection by bringing regulatory clarity to a market that currently operates with significant ambiguity,” McHenry said in a statement provided to my office.
Data from the Department of Labor shows approximately 85% of public school teachers participate in defined-benefit pension plans. These educators rely heavily on investment returns to fund retirement benefits that average $48,356 annually according to National Education Association statistics.
During a press briefing I attended yesterday, AFT leadership presented internal analysis suggesting the legislation could potentially expose up to $175 billion in teacher retirement assets to cryptocurrency investments through indirect fund allocations and derivative products.
“We’re not opposed to technological innovation,” clarified Fedrick Ingram, AFT Secretary-Treasurer. “But innovation cannot come at the expense of retirement security for people who’ve dedicated their lives to public service.”
The cryptocurrency industry has pushed back against these characterizations. Kristin Smith, executive director of the Blockchain Association, disputed the union’s interpretation. “Nothing in this legislation mandates pension investment in digital assets,” Smith emphasized. “It simply provides regulatory clarity that actually enhances investor protection.”
I’ve noticed a concerning trend in financial legislation over my years on this beat – provisions that seem technical often carry significant real-world consequences for ordinary Americans. This particular debate highlights the growing tension between financial innovation and economic security.
Several congressional staffers, speaking on condition of anonymity, acknowledged the AFT’s opposition has already influenced certain lawmakers who previously supported the legislation. “The education community represents a powerful constituency,” one senior Democratic aide explained. “When teachers express concerns about retirement security, representatives listen.”
The bill currently awaits consideration by the House Financial Services Committee, with hearings expected to begin next month. Committee Chair McHenry has indicated willingness to address concerns, though specific amendments have not yet been proposed.
Beyond the immediate legislative battle, this controversy reflects broader questions about cryptocurrency’s place in traditional financial systems. Recent market turbulence, including several high-profile exchange collapses, has intensified scrutiny of digital asset investments.
Policy experts from the Economic Policy Institute suggest the debate represents a pivotal moment in determining appropriate regulatory boundaries. “We’re essentially deciding whether cryptocurrencies should be treated more like traditional investments or remain a separate, alternative asset class,” noted Josh Bivens, EPI’s research director.
As someone who’s witnessed numerous financial regulation fights in Washington, I see this confrontation as particularly significant. The outcome could establish precedents that shape not just cryptocurrency policy, but retirement fund governance for decades to come.
For America’s teachers, the stakes couldn’t be higher. As one elementary school educator told me at yesterday’s AFT press conference, “I’m counting on that pension. I can’t afford to have it gambled away on risky investments I don’t understand.”
The legislative battle continues as lawmakers weigh competing priorities of innovation and security – with America’s educators now firmly established as key stakeholders in the outcome.
