May 27, 2024
By Anjali Kochhar
The United States House of Representatives enacted the Financial Innovation and Technology for the 21st Century Act, which has the potential to transform the landscape of digital currencies. The bill, supported by Republicans, seeks to create a new legal framework for digital assets. Despite warnings from the United States Securities and Exchange Commission (SEC) about potential financial risks, the bill received bipartisan support with a 279-136 vote. Its fate now rests uncertain in the Senate.
Proponents of the bill argue that it will offer much-needed regulatory clarity, fostering the growth of the crypto industry. However, SEC Chair Gary Gensler issued an unusual warning, expressing concerns that the bill could create new regulatory gaps and undermine decades of oversight precedent. Gensler emphasised that such measures could expose investors and capital markets to significant risks.
Of particular concern to Gensler is the bill’s treatment of investment contracts recorded on blockchains. Under the proposed legislation, these contracts would no longer be classified as securities, thus depriving investors of protections afforded by securities laws. Additionally, the bill would grant issuers of crypto investment contracts the authority to self-certify their products as digital commodities exempt from SEC oversight. This provision leaves the SEC with only a narrow 60-day window to challenge such certifications.
Despite Gensler’s reservations, the bill received strong support from crypto advocates and industry organisations. They have long viewed the SEC under Gensler’s leadership as a barrier to wider adoption of digital assets. However, Gensler has consistently argued that cryptocurrencies should be subject to the same regulatory standards as traditional assets.
The House’s approval of the bill coincides with positive signals from the SEC regarding the approval of spot ether exchange-trade funds (ETFs), which could further bolster the crypto industry. Nevertheless, the divergence in views between the SEC and proponents of the bill underscores the challenges in regulating this rapidly evolving sector.
The bill’s passing in the House is a significant step forward in the ongoing debate over digital currency regulation in the United States. As emphasis now shifts to the Senate, the conclusion is still uncertain, with stakeholders anxiously monitoring the legislative process and its potential ramifications for the future of cryptocurrency legislation.
About the author
Anjali Kochhar covers cryptocurrency stories in India as well as globally. Having been in the field of media and journalism for over three years now, she has developed a sharp news sense and works hard to present information that goes beyond the obvious. She is an avid reader and loves writing on a wide range of subjects.
