Regulation
Crypto Regulation Bill Expected to Pass House
The Financial Innovation and Technology for the 21st Century Act is expected to pass the House of Representatives today after overcoming an earlier procedural hurdle by a vote of 204-203 along party lines. The bill was first proposed in July 2023 and passed by the relevant committees on May 6.
Rep. Patrick McHenry, R-North Carolina, and chairman of the House Committee on Financial Services, today spoke out in defense of the FIT Act at the Investment Company Institute’s 2024 Leadership Summit, a proposed law of which he is sponsor.
The law would create a regulatory structure for the digital assets industry and has been criticized by Gary Gensler, chairman of the Securities and Exchange Commission. McHenry sarcastically called Gensler’s criticism “shocking,” during the conference, as Gensler is known to be a harsh critic of the crypto industry in general.
If passed, the bill, also known as HR 4763, would grant the Commodity Futures Trading Commission regulatory authority over decentralized digital assets, as well as the cash or spot market for digital commodities. Decentralized is defined in the bill as a crypto asset in which “no one has unilateral authority to control the blockchain or its use, and no issuer or affiliated person has control of 20% or more of the blockchain.” digital asset or digital voting power. active.”
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The SEC would regulate digital securities that are not decentralized, with additional exceptions for those that limit annual sales or access by non-accredited investors. All rules relating to digital assets would have to be joint SEC and CFTC rules if the bill were to pass.
Gensler today identified some potential problems in the bill in his statement. He noted that the bill allows crypto issuers to self-certify that they are decentralized and only gives the SEC 60 days to review and challenge such certification. Gensler said the SEC does not have the staff to review the large volume of digital assets. He also suggested that “pump and dump schemes and penny stock sellers” could falsely claim digital asset status to avoid regulation and that the SEC would only have 60 days to review it.
Rep. Sean Casten, D-Illinois, proposed an amendment to the FIT bill that would have extended that deadline to 90 days, but it was not accepted.
Gensler added that the existing rules are clear enough, it’s just that the crypto industry doesn’t want to follow them: “The crypto industry’s record of failure, fraud and bankruptcies is not due to the fact that we do not have rules or because the rules are not clear. . This is because many players in the crypto industry do not play by the rules. We should make the political choice to protect the investing public rather than facilitate the business models of non-compliant companies.
McHenry responded in an interview with Eric Pan, CEO of ICI, that “at this time we have no definition of digital asset” under the law and that the bill will provide regulatory clarity to the industry. McHenry added that “it’s the Gensler regime that has made things less safe” and he will continue to focus on “speaking to the lawmakers who actually voted” on the bill.
The White House said in a statement that “the administration opposes the passage of HR 4763, which would affect the regulatory structure of digital assets in the United States”, suggesting that a veto of the bill would be likely if it reached the president Joe Biden.
During debate over the bill, Rep. Stephen Lynch, D-Massachusetts, the ranking Democrat on the House Financial Services Committee’s Subcommittee on Digital Assets, described the law as one of “the three worst bills I’ve seen progress through the House.” » Other opponents of the bill explained that it does not address crypto’s role in financing illicit activities and leaves much of crypto enforcement to the CFTC, which traditionally has little authority. experience in the field of intangible assets or in retail markets.
Keywords: Crypto assets, Gary Gensler, SECOND