Regulation
House passes bill to create new cryptocurrency framework despite reluctance from Securities and Exchange Commission Chairman Gary Gensler
The House on Wednesday passed legislation establishing a new framework for when cryptocurrencies should be regulated by the Securities and Exchange Commission (SEC) or the Commodity Futures Trading Commission (CFTC).
The lower house voted 279-136 to pass the Financial Innovation and Technology for the 21st Century Act (FIT 21), despite opposition from SEC Chairman Gary Gensler. Seventy-one Democrats joined 208 Republicans in supporting the measure.
FIT 21 would classify digital assets, such as cryptocurrencies, among products regulated by the CFTC if the blockchain on which they operate is “functional and decentralized.”
If their blockchain is “functional but not decentralized,” they would be considered securities and fall under the jurisdiction of the SEC.
Gensler argued in a statement Wednesday that the legislation would “create new regulatory gaps and undermine decades of precedent for investment contract oversight.”
“The crypto industry’s record of failures, frauds and bankruptcies is not because we don’t have rules or because the rules aren’t clear,” the president said. the SEC before the House vote. “That’s because many in the crypto industry don’t 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,” he added.
Gensler noted that FIT 21 would abandon the Supreme Court’s long-standing test for classifying securities and allow issuers to self-certify that their products are decentralized, making them digital products and removing them from government oversight. DRY.
This would allow much of the crypto industry to operate under “a light regulatory regime” with the CFTC, Rep. Maxine Waters (D-Calif.), ranking member of the House Financial Services Committee, argued Wednesday before the House.
“This is a bill where crypto companies decided they didn’t like the SEC, they didn’t want to be regulated, and they were going to run to the United States Congress- United, and they were going to use their power and they were going to use their employees to change the rules of the game,” Waters said.
Gensler is a unpopular character in the industry due to its frequent enforcement actions against crypto companies and its hesitancy to approve new crypto-based assets.
The SEC finally approved several exchange-traded funds (ETFs) holding Bitcoin in January, but only after a federal court ruled that the agency improperly rejected an application for a spot Bitcoin ETF.
Rep. French Hill (R-Ark.), who testified before the House Rules Committee in favor of the legislation on Tuesday, argued that it “does not create a ‘light touch’ regime for crypto scammers and n does not prevent the SEC from being able to monitor its markets.
“This bill does not create loopholes in securities matters. This bill does not deregulate crypto,” said the chairman of the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion.
Instead, House Financial Services Chairman Patrick McHenry (R-N.C.) argued Wednesday that the bill helps clear up confusion in the current regulatory framework, in which the SEC and CFTC are “in a food fight for control of these asset classes”.
“FIT 21 addresses this problem by creating a regulatory framework that will provide clear rules of conduct and strong guardrails for Americans to engage in the digital asset ecosystem,” McHenry told the House.
Although the White House said in a statement Wednesday that it opposed FIT 21 due to the lack of “sufficient protections for consumers and investors,” it did not specifically threaten to veto the legislation.
“The administration looks forward to working with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, that will promote responsible digital asset development and payment innovation and will help strengthen U.S. leadership in the global financial system. “It said.
Sheila Warren, CEO of the Crypto Council for Innovation, called Wednesday’s vote a “defining moment for the crypto industry.”
“The permafrost is melting and there is a sense of positive momentum across Washington,” Warren said in a statement.
Kristin Smith, CEO of the Blockchain Association, highlighted the bipartisan nature of the vote.
“This bipartisan vote indicates that lawmakers on both sides recognize the immense potential of blockchain technology and digital assets, while also recognizing the need for regulatory guidelines to enable responsible innovation and prioritize consumer protection” , Smith said.
Updated at 6:12 p.m. EDT.
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