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SEC Chairman Gary Gensler criticizes cryptocurrency market bill ahead of House vote
Hours before the US House of Representatives is set to vote on a cryptocurrency bill, President Biden released a declaration saying he is against the legislation, but is not threatening to veto it.
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The White House expressed opposition to The Financial Innovation and Technology for the 21st Century Act (FIT21) bill Wednesday afternoon, citing concerns about inadequate investor protection.
The bill, “The Financial Innovation and Technology for the 21st Century Act (FIT21), would effectively classify cryptocurrency as a commodity, not a security, and therefore make it exempt from securities regulations.
“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 payments innovation and help strengthen industry leadership. United States in the global financial system,” the White House statement reads. “HR 4763 in its current form does not have sufficient protections for consumers and investors engaging in certain digital asset transactions.”
The statement comes just hours after U.S. Securities and Exchange Commission Chairman Gary Gensler publicly expressed his opposition to the bill.
Gensler declared, “FIT21 would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, exposing investors and capital markets to immeasurable risk.” He reiterated his position on cryptocurrency as a security, expressing concern that the bill would exclude investment contracts recorded on blockchain from the legal definition of securities and, therefore, from the protections of the federal securities laws.
“Furthermore, by removing this set of investment contracts from the legal list of securities, the bill implies what courts have repeatedly established – but what cryptocurrency market participants have attempted to deny – that many crypto assets are offered and sold as securities under existing law, “,” the chair added.
The bill would allow companies to self-certify that they are issuing digital assets and would also give the SEC 60 days to determine whether such assets meet the law’s definition of digital assets.
“There are currently more than 16,000 crypto assets. Given the limitations on staff resources and the absence of new resources under the bill, it is implausible that the SEC could review and challenge more than a fraction of those resources,” He said.
FIT21 was introduced last summer to determine whether a cryptocurrency should be classified as a commodity or a security and assign oversight between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) accordingly.
For Forbes, Republican candidate and former US President Donald Trump and his advisors also support the cryptocurrency market structure bill. Trump, who criticized cryptocurrencies as a scam against the US dollar, he is now promoting himself as a cryptocurrency candidate. He announced it yesterday that it would start accepting campaign donations in cryptocurrencies.
The cryptocurrency industry looks forward to regulatory action from US authorities and supports changes to laws to prevent cryptocurrencies from being classified as securities.
The SEC chairman, however, did he referred to cryptocurrencies as a security from time to time and claims that it falls within its jurisdiction. Gensler, who once taught a course on blockchain and cryptocurrencies at the Massachusetts Institute of Technology, is known for his rigorous approach to cryptocurrency regulation. He called the cryptocurrency market a Wild West, underlining its need for regulation.