Regulation
SEC’s Gensler slams crypto regulation bill ahead of vote
Gary Gensler, Chairman of the Securities and Exchange Commission. Image: Kevin Dietsch via Getty Images.
SEC Chairman Gary Gensler opposed the Financial Innovation and Technology for the 21st Century Act (FIT21) in a statement Wednesday.
The bill, which has garnered support from leading Republicans and major cryptocurrency companies, is expected to be voted on in the House of Representatives, with its future in the Senate remaining uncertain.
Gensler’s criticism focuses on the risk that the bill could harm the SEC’s ability to protect investors and the integrity of U.S. capital markets by changing the classification of crypto assets and reducing regulatory oversight.
“[FIT 21] This would create new regulatory gaps and undermine decades of precedent for oversight of investment contracts, exposing investors and capital markets to immeasurable risk,” Gensler said.
The FIT21 Act, introduced in July 2023, aims to establish clear federal guidelines for digital asset markets and delineate the roles of the SEC and the Commodity Futures Trading Commission (CFTC) in regulating cryptocurrencies.
Gensler said the bill could erode the Howey test, a cornerstone in determining investment contracts, and allow crypto companies to circumvent SEC regulations by self-certifying their products as digital products “decentralized”.
Additionally, the FIT21 law’s exclusion of crypto trading platforms from the definition of an exchange is seen by Gensler as a decision that could undermine investor protection.
The White House also released a statement Wednesday opposing passage of the bill.
“H.R. 4763 in its current form does not have sufficient protections for consumers and investors who engage in certain digital asset transactions,” the Executive Office of the President said. said Wednesday.