June 23, 2024

House Passes Landmark Digital Currency Bill Amid SEC Concerns


The U.S. House of Representatives on Wednesday passed a groundbreaking bill designed to establish a new legal framework for digital currencies, despite stern warnings from the U.S. Securities and Exchange Commission (SEC) that the legislation could introduce significant financial risks.

The Financial Innovation and Technology for the 21st Century Act, sponsored by Republicans, garnered bipartisan support, passing with a vote of 279-136. The bill aims to provide regulatory clarity for the burgeoning digital currency industry and foster its growth. However, it remains uncertain whether the Senate will consider the measure.

Proponents of the bill in Congress argue that it will eliminate regulatory ambiguity, encouraging innovation and expansion within the digital currency sector. The bill’s passage coincides with signals from the SEC that it may approve applications for spot ether exchange-traded funds, a development seen as a major boon for the industry.

Despite this, SEC Chair Gary Gensler issued a statement expressing strong opposition to the bill. Gensler warned that the legislation “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at immeasurable risk.”

Supporters of the cryptocurrency industry, who have frequently criticized Gensler’s SEC for impeding the wider adoption of digital assets, hailed the bill’s passage. They argue that the current regulatory environment stifles innovation and growth.

Gensler, however, pointed to a series of high-profile prosecutions, fraud cases, bankruptcies, and failures within the cryptocurrency space as evidence that digital currencies should be regulated under existing securities laws. He argued that the new bill would strip away these protections by no longer classifying investment contracts recorded on a blockchain as securities.

Among his criticisms, Gensler noted that the bill would allow issuers of crypto investment contracts to self-certify their products as digital commodities, effectively removing them from SEC oversight unless the agency challenges this certification within 60 days. This, he contends, could significantly weaken investor protections and oversight capabilities.

The bill’s supporters, meanwhile, emphasize the potential for positive transformation within the digital currency industry, arguing that a clear regulatory framework will enable legitimate businesses to thrive while fostering innovation and technological advancement.

As the debate over the future of digital currency regulation continues, the eyes of the financial world will be on the Senate to see whether it will take up this contentious and potentially transformative legislation.

Digital Assets Desk

Print Friendly, PDF & Email