On Wednesday, the U.S. securities regulator urged lawmakers to reject a proposed bill designed to establish a new legal framework for digital currencies, warning it could undermine existing legal precedents and place capital markets at “immeasurable risk.”
The U.S. House of Representatives is set to consider the Republican-sponsored Financial Innovation and Technology for the 21st Century Act, which aims to clarify the jurisdiction of various agencies over digital assets. Proponents of the bill argue that it will provide regulatory clarity, thereby fostering industry growth.
Despite its uncertain future in the U.S. Senate, the legislation comes at a time when the U.S. Securities and Exchange Commission (SEC) is expected to approve applications for spot ether exchange-traded funds, marking a surprising boost for the crypto industry.
SEC Chair Gary Gensler expressed strong opposition to the bill, stating that it “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 has garnered support from crypto advocates and industry groups, who view Gensler’s SEC as a barrier to broader digital asset adoption. Gensler, however, has consistently argued that cryptocurrencies should be regulated under the same laws as other assets, citing numerous high-profile prosecutions, fraud cases, bankruptcies, and failures within the sector.
In his statement on Wednesday, Gensler highlighted that under the proposed bill, investment contracts recorded on a blockchain would no longer be classified as securities, thereby stripping investors of protections afforded by securities laws. Additionally, he criticized the provision allowing issuers of crypto investment contracts to self-certify their products as digital commodities not subject to SEC oversight, giving the agency only 60 days to challenge such certifications.
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