AFL-CIO Says RFIA Could Expose Workers’ Retirement Funds to Bitcoin and Broader Financial Risks

• RFIA could allow 401(k)s and pensions to hold crypto, increasing workers’ exposure.

• Union leaders say the bill lacks meaningful oversight for bank custody and tokenized securities.

• Comparisons made to the 2008 crisis highlight systemic risk if banks engage in crypto trading.

Responsible Financial Innovation Act risks retirement funds and systemic stability — read AFL-CIO concerns and next steps. Learn more from COINOTAG.

What is the Responsible Financial Innovation Act (RFIA)?

The Responsible Financial Innovation Act (RFIA) is a Senate discussion draft intended to create a federal framework for digital assets. The bill aims to define regulatory roles and market rules, but labor leaders say it falls short on worker protections and oversight for custody and tokenization.

How does the RFIA affect retirement funds and pensions?

The AFL-CIO argues the RFIA would increase retirement plans’ exposure by allowing 401(k)s and pensions broader access to crypto custody and digital asset holdings. AFL-CIO director Jody Calemine warned this could place pension assets at higher risk without strict safeguards.

The letter to the Senate Banking Committee, authored by AFL-CIO leadership, states the draft bill “provides the facade of regulation” and lacks measures to shield workers from volatility. The concern centers on three mechanisms: bank custody of crypto, eased access for retirement plans, and explicit pathways for tokenized securities.

Why do labor leaders oppose the bill?

AFL-CIO leaders say the bill lacks safeguards that would protect workers’ retirement savings and could place public protections like the Deposit Insurance Fund at higher risk if banks custody crypto. They highlight tokenization provisions that may allow private companies to create parallel, lightly regulated public markets.

Calemine compared potential outcomes to practices that contributed to the 2008 financial crisis, noting: “Banks engaging in crypto-based hedge fund trading activity, which would be allowed under this regime, could be even riskier than some of the dangerous financial activities conducted before the 2008 financial crisis.”

The RFIA was originally introduced in 2022 by Senators Cynthia Lummis and Kirsten Gillibrand and has been revised since. The Senate Banking Committee is reviewing the draft as an alternative regulatory approach to other market-structure proposals.

AFL-CIO headquarters in Washington, DC. Source: AFL-CIO

When could these rules change retirement plan practices?

As a discussion draft, the RFIA is not yet formally introduced. Senate committee deliberations and potential amendments will determine timing. If advanced, regulatory guidance and implementation timelines would follow, potentially affecting retirement plan custodial policies within months to years.

Frequently Asked Questions

Will RFIA let 401(k)s buy crypto?

The draft RFIA would broaden access pathways, potentially enabling 401(k) and pension plans to hold crypto via permitted custodians, according to AFL-CIO concerns. Plan sponsors would need to evaluate fiduciary duty and risk before adding such assets.

Could banks holding crypto threaten deposit insurance?

Labor leaders warn that expanded bank custody of crypto could increase pressure on taxpayer-backed Deposit Insurance Funds if banks assume higher trading or custody risks linked to volatile digital assets.

Key Takeaways

• Worker risk: AFL-CIO argues RFIA would raise pension and 401(k) exposure to crypto volatility.
• Systemic concern: Bank custody and tokenization could introduce new financial-stability risks.
• Next steps: Senate Banking Committee deliberations and amendments will shape protections; trustees should begin risk reviews now.

Conclusion

The AFL-CIO’s critique of the Responsible Financial Innovation Act centers on worker protections, custody standards, and tokenization risks. As the Senate Banking Committee weighs revisions, trustees and policymakers must prioritize fiduciary safeguards and systemic stability to prevent unintended exposure of pensions and deposit insurance to crypto volatility. COINOTAG will track updates.

Published by COINOTAG • Updated: 2025-10-08