The US House of Representatives passed a Bill on Wednesday to establish a new legal framework for cryptocurrencies, despite a rare warning from the US securities regulator, Securities and Exchange Commission (SEC), about potential financial risks.
The Republican-sponsored Financial Innovation and Technology for the 21st Century Act was approved with a bipartisan 279-136 vote. However, media reports said that it’s unclear as of yet if the Senate will consider the measure.
Supporters in the Congress argue that the Bill will provide regulatory clarity and promote industry growth.
The House approval comes as the SEC indicates it may approve applications for spot ether exchange-traded funds, a surprising boost for the industry.
Why is the US SEC opposing the Crypto Bill?
However, SEC Chairperson Gary Gensler warned 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.”
Gensler, citing high-profile prosecutions, fraud cases, bankruptcies, and failures, has insisted that cryptocurrencies should be subject to the same laws as other assets. He argued that under the Bill, investment contracts recorded on a blockchain would no longer be deemed securities, removing investor protections under securities laws.
Gensler also criticised the Bill for allowing issuers of crypto investment contracts to self-certify their products as digital commodities, leaving the SEC only 60 days to challenge these claims.
Meanwhile, the Bill has the backing of crypto supporters and industry bodies, who have long viewed Gensler’s SEC as a barrier to the wider adoption of digital assets.
What is the US Crypto Bill?
The Bill classifies cryptocurrencies as commodities rather than securities, potentially altering the regulatory landscape of the crypto industry. It also grants primary regulatory responsibility to the Commodity Futures Trading Commission (CFTC), reducing the SEC’s oversight. The digital-asset sector has long complained that the SEC’s traditional disclosure regimes are unworkable for them.
The Bill also creates a tailored disclosure and registration regime for digital asset companies. However, it faces long odds in the Senate, where several lawmakers have proposed their own Bills to overhaul crypto regulations.
Donald Trump’s presidential campaign and crypto
The announcement highlights Trump’s message as a crypto-friendly candidate, appealing to young male voters who are increasingly involved in digital assets. The campaign is accepting various popular cryptocurrencies, including Bitcoin, Ether, and US Dollar Coin, as well as lower-value coins like Shiba Inu Coin and Dogecoin.
(with inputs from Reuters)
First Published: May 24 2024 | 10:13 AM IST
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