On Wednesday, the U.S. securities regulator warned legislators that a bill to create a new legal framework for digital currencies would undermine legal precedent and put financial markets at “immeasurable risk”
Republican-sponsored Financial Innovation and Technology for the 21st Century Act, a bill that would determine in part which agencies have authority over which digital assets, is anticipated to be debated by the U.S. House of Representatives later on Wednesday.
Supporters of the measure in Congress assert that it will facilitate regulatory clarity, thereby fostering the expansion of the industry.
The legislation’s future in the U.S. Senate is uncertain. Still, its introduction coincides with the U.S. Securities and Exchange Commission’s (SEC) unexpectedly positive signal that it will likely approve applications for spot ether exchange-traded funds.
However, the bill “would create new regulatory gaps and undermine decades of precedent regarding the oversight of investment contracts, putting investors and capital markets at incalculable risk,” according to SEC Chair Gary Gensler’s statement.
Industry organizations and crypto supporters who have long regarded Gensler’s SEC as an obstacle to the widespread adoption of digital assets support the bill.
Prominent prosecutions, fraud cases, bankruptcies, and disasters notwithstanding, Gensler has maintained that cryptocurrencies ought to be governed by legislation identical to other forms of assets.
On Wednesday, he stated that investment contracts recorded on a blockchain would no longer be considered securities under the proposed legislation, thereby denying investors protection under securities laws.
Gensler stated that the measure would permit issuers of crypto investment contracts to self-certify that their products are digital commodities exempt from SEC oversight, leaving the agency with only sixty days to contest this claim.
