Jai Sahu
The U.S. House of Representatives on Wednesday approved a bill aimed at establishing a new legal framework for digital currencies, despite an unusual warning from the U.S. securities regulator about potential financial risks.
The Financial Innovation and Technology for the 21st Century Act, sponsored by Republicans, passed with a bipartisan 279-136 vote. It remains uncertain if the Senate will consider the measure.
Supporters of the bill in Congress argue that it will provide regulatory clarity and support the industry’s growth.
The House approval comes as the U.S. Securities and Exchange Commission (SEC) signals that it will likely approve applications for spot ether exchange-traded funds, giving the industry an unexpected boost.
But SEC Chair Gary Gensler said in a statement 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.”
The bill was backed by crypto supporters and industry organizations who have long viewed Gensler’s SEC as an obstacle to the broader adoption of digital assets.
Noting high-profile prosecutions, fraud cases, bankruptcies, and failures, Gensler has maintained that cryptocurrencies should be regulated under the same laws as other assets.
In his Wednesday statement, he noted that under the bill, investment contracts on a blockchain would no longer be classified as securities, removing investor protections under securities laws.
Among other issues, Gensler mentioned that the bill would allow issuers of crypto investment contracts to self-certify their products as digital commodities exempt from SEC oversight, giving the agency just 60 days to contest this.