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SEC Chairman Gary Gensler Slams Crypto Market Bill Ahead of House Vote
Hours before the US House of Representatives votes on a crypto bill, President Biden released a statement saying he is against the legislation, but he is not threatening to veto it.
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The White House on Wednesday afternoon expressed opposition to the bill titled the “Financial Innovation and Technology for the 21st Century (FIT21) Act” due to concerns about insufficient investor protections.
The bill, “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 movable.
“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. “, the White House statement said. “HR 4763 in its current form does not have sufficient protections for consumers and investors who engage in certain digital asset transactions.”
The statement comes hours after U.S. Securities and Exchange Commission Chairman Gary Gensler publicly voiced his opposition to the bill.
Gensler declared“FIT21 would create new regulatory gaps and undermine decades of precedent for oversight of investment contracts, thereby exposing investors and capital markets to immeasurable risks.” He reiterated his stance on cryptocurrencies as as securities, expressing concern that the bill would exclude investment contracts recorded in the 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 ruled – but what crypto market participants have attempted to deny – that many crypto assets are offered and sold as securities under applicable law. “, added the president.
The bill would allow companies to self-certify that they issue digital products and would also give the SEC 60 days to determine whether those assets meet the bill’s definition of digital products.
“There are currently over 16,000 crypto assets. Given the limitations on staff resources and the lack of new resources provided by the bill, it is implausible that the SEC would be able to review and challenge more than a fraction of these assets. he said.
FIT21 was introduced last summer to determine whether a cryptocurrency should be classified as a commodity or a security and assign oversight accordingly between the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC).
By Forbes, Republican candidate and former US President Donald Trump and his advisors also support the crypto market structure bill. Trump, who criticized crypto as a scam against the American dollar, now presents itself as the crypto candidate. Yesterday he announced that he would start accepting campaign donations in crypto.
The crypto industry is eagerly awaiting regulatory action from US authorities and advocating for changes in laws to prevent crypto from being classified as a security.
The president of the SEC, however, refers to crypto as security from time to time and claims that it falls within his competence. Gensler, who once taught a course on blockchain and cryptocurrencies at the Massachusetts Institute of Technology, is known for his strict approach to crypto regulation. He called the cryptocurrency market the Wild West, emphasizing its need for regulation.