US House Passes Crypto Bill Amid SEC Warnings of Financial Risks
Under the new bill, investment contracts recorded on a blockchain would no longer be classified as securities, which Gensler warns would strip investors of protections under securities laws.
The U.S. House of Representatives passed a bill on Wednesday aimed at establishing a new legal framework for digital currencies, despite stern warnings from the U.S. Securities and Exchange Commission (SEC) about potential financial risks. The Financial Innovation and Technology for the 21st Century Act, sponsored by Republicans, was approved with a bipartisan vote of 279-136. The future of the bill in the Senate remains uncertain, according to a news report by Reuters.
Supporters of the bill in Congress argue that it will provide much-needed regulatory clarity and foster the growth of the cryptocurrency industry. The House's approval coincides with indications from the SEC that it may soon approve applications for spot ether exchange-traded funds, a significant positive development for the sector.
However, SEC Chair Gary Gensler issued a statement expressing concerns that the bill would "create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk." Gensler's stance is that cryptocurrencies should be regulated under the same laws as other financial assets, citing numerous high-profile fraud cases, bankruptcies, and failures within the crypto space.
Under the new bill, investment contracts recorded on a blockchain would no longer be classified as securities, which Gensler warns would strip investors of protections under securities laws. Furthermore, the bill would allow issuers of crypto investment contracts to self-certify their products as digital commodities, exempting them from SEC oversight unless the agency challenges the certification within 60 days.
The legislation has been strongly backed by cryptocurrency supporters and industry organizations, who view the current SEC administration as a significant barrier to broader digital asset adoption. The debate highlights the ongoing tension between promoting innovation in the financial sector and ensuring robust investor protections.
