President Biden and SEC Chair Gary Gensler are voicing concerns over a new cryptocurrency bill ahead of a vote in the US House of Representatives.
The proposed legislation, known as the Financial Innovation and Technology for the 21st Century Act (FIT21), aims to create a regulatory framework for digital assets, addressing issues such as consumer protections and the use of cryptocurrency in illicit finance.
SEC Chair Gensler has warned that the bill would exclude certain investment contracts recorded on a blockchain from the legal definition of securities. He stated, "By removing this set of investment contracts from the statutory list of securities, the bill implies what courts have repeatedly ruled—that many crypto assets are being offered and sold as securities under existing law."
The Biden administration shares these concerns, arguing that the bill, in its current state, "lacks sufficient protections for consumers and investors who engage in certain digital asset transactions." The administration emphasizes its desire for ongoing collaboration with Congress to develop legislation that strikes a balance between consumer protections and innovation.
On the other hand, Republican presidential candidate Donald Trump and several prominent crypto firms—including Gemini, Kraken, Coinbase, and the Digital Currency Group—are in support of the legislation.
Gensler further remarked, "The crypto industry’s record of failures, frauds, and bankruptcies is not due to a lack of rules or unclear regulations. It’s because many players in the crypto sector do not adhere to the established guidelines. Our priority should be to protect investors rather than facilitating the business models of noncompliant firms."
Despite the opposition, the bill is scheduled for discussion and a vote on Wednesday, and it is expected to receive bipartisan support, with some Democrats joining Republicans in backing it. However, without a companion bill in the Senate, FIT21 may still falter.